The Bear Facts!

Hello everyone! Welcome to the October edition of the Boodle Blog! We thank you for being here, and we appreciate having you as a customer, or someone who is thinking about joining our financial education community.
We just finished off the third quarter with some pretty bad numbers for the month of September, and for the year to date. Let's take a look and see where we are in this Market.
For the month of September, the market, as measured by the S&P 5OO closed down with a loss of 8.63%. The DOW finished only a fraction better with a loss of 8.28%. The NASDAQ led the way lower with a 9.07% loss! Year to date, the DOW, S&P 500 and the NASDAQ are down 20.95%, 24.77% and 32.40 respectively. Let there be no doubt; 2022 will go down in history as a Bear Market. Lower your expectations for any hope of a positive return this year.
Now you may be asking yourself "what is a Bear Market"? The answer is "a decline in equity prices of 20% or greater from the previous year's high.
There are 5 root causes of a bear market - 1. Tight Money- 2. Rising Rates-3. High Inflation-4. Rapid Growth- 5. Overvaluation. Without getting too technical with you, I will go into detail on a couple of these causes of a bear market.
Rising Rates- When interest rates rise, as I'm sure you can attest, then this can cause a recession, which Boodle believes we are already in. Look at the interest rates on a home loan now, and you will know what we mean, the rates are heading higher.
High Inflation - Anyone who has purchased gas, groceries, or an automobile can attest to high inflation in the economy. The Federal Reserve is mandated to keep inflation low (2% or 3%)- in Boodle's opinion, they haven't done a very good job - would you agree?
Tight Money - The Federal Reserve is right now, in the process of wringing excess money, aka "liquidity" out of the economy. The government spent $4 Trillion dollars to keep the economy from going into a depression. How good of a job do you think they've done?
So, what now? Let's go back to the analogy of the Bear. Why do the financial pontificators call this a "Bear Market"? It actually makes sense - when a bear feels threatened by humans, or any other creature, what does a Bear do? It swats and claws, ripping apart anyone that stands in his path. Look at the stock market - Stocks that were up 25%, 40%, and more, are down 25%, 40%, 75% down in some cases! Now, think back to the time when you went to camp and your scout leader told you what to do if a bear spots you in the forest. Should you run? No, you can't outrun a bear! Should you scream? No that won't help! What should you do? You should lay on the ground and pretend to be dead! With luck, the bear will leave you alone. You will be wounded (stocks are below where you purchased them), but you will survive the Bear attack, and that is how you financially survive a Bear attack. And keep in mind that there usually are very few safe havens to hide in a bear market. In future blogs, we hope to have some good news for all of our clients and blog readers. Here is a bit of that "good news" - a bear market typically last for about 289 days, or 9 months if you will. Boodle has seen its share of Bear Markets in the past, and these violent downturns are a part of investing. Don't become a victim of the bear! Stay calm, follow Boodle and keep informed on what is happening in the markets and how to deploy your "bear repellant"! We hope to see you back here in November. Until then, enjoy your month and have a Happy and safe Halloween!