Inflation Inflation Inflation! This is the catch cry for 2022. Why? Simple, its interest rates folks! All indications are that since the economy has climbed out of the big black hole of Covid 2019 the Fed is going to raise them, and soon. Some analysts predict that there will be up to three interest rate hikes in 2022 alone! Scary Huh! So what will this mean for the individual investor and the market in general?
To answer this question and help you navigate the troubled waters of free market economics I want to introduce you to my new friend the Traveling Trader. This is a guy with over twenty years experience as a trader, an ever growing portfolio and a successful coaching business. So why the Traveling Trader I hear you ask? Well, this guy loves two things in life: traveling and trading. The more success he has trading the more traveling he gets to do. It’s a simple equation really that provides him with all the motivation needed to succeed!
When I recently met the Traveling Trader the first thing he did was sit me down and give me a history lesson. Now don’t laugh folks, this stuff is important. As the Traveling Trader explained to me, the more you know about how the market has behaved in the past and the circumstances that led to that behavior the more likely you will be able to make the right investment decisions in the present and going forward into the future. So with the market reaching something like its 69th all time historical high this year, the 9th yearly high in a row, the S & P up by 5% for December of 2021 this has been some kinda bull run!
But as a wise man once sang: all things must pass. Historically, the Traveling Trader told me, every time the market hits an historical high followed by a period of inflation and rising interest rates there has been either a major correction or a crash! Yes folks, that big ole bull gets chased away by the big bad grizzly bear! So what will 2022 bring? Well some doom sayers out there are predicting a market crash for 2022 while others predict a substantial market correction. Either way this means a downturn in the market.
However, this doesn’t mean it’s all doom and gloom folks. As the Traveling Trader explains even if there is a correction of around 10% this makes it the perfect time to buy quality stock at a discounted price. If your current portfolio registers a loss, play it cool and stick with the long term game. As history demonstrates what goes around comes around. Buy those quality discounted stock and you will be perfectly positioned to make a killing on the next up swing. So keep your skies blue with the Traveling Trader!
If you would like to follow the Traveling Trader you will find a wealth of tips in his YouTube videos.