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Rough First Half For The Markets

Here we are.  A firecracker or two away from the Fourth of July.  Yeah, I’ve got neighbors who think they need to practice setting off fireworks for two weeks before they’ll set them off on July 4th.  And of course, any leftovers will have to be set off every night for the next week too.

Watching the stock market’s performance this year has been like watching firecrackers fizzling out before the bang.

The first half is finally over.  The market posting its worst start to a calendar year since the third season of my favorite tv show as a kid, Adam-12.  The year 1970.  The city…Los Angeles.  I carry a badge.  My name’s Friday.  Okay, that’s a different show. (Dragnet)

But the facts are, at least as main stream media would like us to believe, are rising interest rates, rising inflation, and whatever their narrative of the day is, handcuffing investor optimism and arresting prospects of economic growth.

Whether its Trump commandeering a limo or Zoolander walking the runway in Ukraine, the market as measured by the S&P 500, still falling 21% in the first half.

But yearly pullbacks of that depth are as common as the McRib making its comeback appearance.

Yeah, I know.  No correlation there.  And if there was, correlation does not mean causation.

But history shows there is some correlation to bad yearly starts for the market leading to strong finishes.

The good news is that since 1928, the five previous times the market had a first half-year return worse than a negative 15%, the second half of the year was higher every time.  

Maybe it’s like a rubber band getting stretched.  The further you pull, the faster it snaps back.

Yes, I’m just speculating.  Trying to put a little positive spin on it.

Yet, I’m not a speculator.  Or a trader.  And you aren’t either.  We know that pullbacks, corrections, and even bear markets are a normal part of the investing cycle.

We don’t fear them.  We embrace them.  This is the time when panic sellers return their investment shares to their rightful owners.

And if we’re in the stage of our investing careers where we’re putting new money to work, we rejoice.  Everything is on sale.  And our regular contributions to 401ks and IRAs are buying more shares for the same amount of money.  

Come on, man.  Here’s the deal.  It’s a store-wide sale at prices you may never see again.

That sounds like what Grandpa used to tell us.  Buy low, sell high Sonny Boy.  Just the facts ma’am.  Just the facts.