I hope that you and your families enjoyed a great 4th of July as our family did. While our country certainly has problems and challenges that need to be addressed, I am reminded of how fortunate we are to live in this great country. I came up with some things I love most about America. What do you love most about America?
Reasons I Love America
Freedom
Freedom of speech. Freedom of religion. So many have fought for it. Many around the world don’t get to enjoy.
Opportunity
Success is right around the corner for those willing to work hard and use their God given talents in our country.
Patriotism
Americans love their country. Period.
Diversity
Our country is filled with every nation, race, and color. We are stronger for it.
Resilience
We always bounce back stronger than ever.
Economy
We have the best economy in the world…..and it’s not even close. The poor here are still considered rich compared to much of the world.
The first six months of 2022 have been challenging for our country and the markets. The S&P 500 declined 23.6% from its all-time high at 4,796.56 on January 3 to a closing low of 3,666.77 on June 16th. The index finished the 1st half of the year at 3,785.38 on June 30.
In an effort to offset the economic devastation of the pandemic, the Federal Reserve created far too much money and left it around for far too long. The Fed has moved recently to remove some of the excess liquidity by raising interest rates and shrinking its balance sheet.
The war in Europe and supply chain problems have exacerbated inflation, but in my judgement they’re irritants: monetary policy got us into this mess, and monetary policy must now get us out. The fear, of course, is that the Fed will overtighten, putting the economy into a recession.
My position continues to be: so be it. If an economic slowdown over a few calendar quarters is what it takes to stamp out inflation, it would be by far the lesser of the two evils. Inflation is a cancer, and it must be destroyed.
With regards to our investment policy, nothing has changed. I’m often asked what changes we are making in light of the recent market pullbacks. I continue to council: "Don’t just do something. Stand there.” We are long-term, goal focused investors. We own diversified portfolios of superior companies around the world. They have demonstrated their ability to increase earnings over time, thus supporting increases in their value.
We act continuously on our financial and investment plan; we do not react to current events, no matter how distressing they may be. After 30 months of chaos (the pandemic in its several variants, the election that would not end, roaring inflation, the supply chain mess, war in Europe and so on), we are all understandably exhausted. That is when the impulse to capitulate becomes strongest. This is when that impulse must be resisted most strongly. That is my job.
This too shall pass. I’m here to talk all this though with you at any time. Thank you for being our clients. It is a privilege to serve you.
Sincerely,
Bain Nickels, CFP®,CKA®
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