It has not been a lucrative year for the stock market. The S&P has fallen for a whopping 10 weeks out of the past 11. The Dow closed below 30,000 for the first time since January 2021.
Article by Ty Flores from our premium news partners at The Epoch Times.
If we turn to historical data for insight into the future, things don’t look much more optimistic. According to Goldman Sachs strategist Vickie Chang, the S&P 500 has dropped below 15 percent a total of 17 times since 1950. On 11 of those occasions, the stock market bottomed out only when the Federal Reserve indicated it would loosen monetary policy.
As we currently head toward bear market territory, the Fed has given no indication of doing so. Indeed, the Fed plans to continue raising rates into 2023.
What does this mean for investors? For those investing in the S&P 500, their portfolios are worth the same now as they were in early 2021. Concurrently, inflation has continued to rise, further exacerbating any portfolio returns. This begs the question: as the markets continue their tumultuous behavior, what should you do?
Panic Helps No One
Panic rarely, if ever, improves a situation. Investing is no exception. It’s important to keep a level head and stay objective.
If you are working with an advisor, be direct with them. Ask about their plans for the future and find out how current events change things for them, if at all.
If you do your investing on your own, avoid being emotional and subjective in your decision-making. Certainly, the stock market is not great at present. However, any drastic decisions you make now could severely impact your portfolio, for the foreseeable future.
There is no single right or wrong answer. It all depends on the person and their situation. Regardless of the direction you decide to take, make sure your decision is a calculated one.
What Investment Stage Are You In?
There are different stages on everyone’s investment horizon. A young professional working at their first job out of college will be in a completely different ballpark than someone in their late fifties. When an economic downturn occurs, it is important to remember this.
If the S&P and other indices continue to fall, and with negative annual returns in the double digits, investors planning to access their money in the near future may want to consider more conservative strategies.
Let’s say you are planning on retiring in two years and your portfolio loses 20 percent for the year, dropping from $400,000 to $320,000. The stock market will almost certainly correct itself at some point. The question you should ask is whether it will do so in a suitable timeframe for you.
If you want to retire with at least $300,000 in your portfolio and you are still above that mark despite your losses, it may not be advantageous to continue investing in volatile funds so close to their distribution stage.
However, younger investors still in their accumulation stage—and not needing liquidity in the near future—can probably ride out this storm. What the younger crowd lacks in principal and prosperity from decades of compound interest is made up for by the decades still ahead of them. Their portfolios can take a hit and bounce back. There is plenty of time for them to meet their goals.
For those whose advisors are using Riskalyze, now would be an excellent time to reevaluate your risk tolerance with a risk assessment. To be clear, this is not a paid advertisement for Riskalyze. I recommend tools and strategies within my realm of experience. When I was an advisor, I worked for many years without this tool and for many years with it. I strongly preferred the latter, as did my clients.
Will the Stock Market Recover?
The future is speculative. We can make educated guesses—and some are more qualified to do so than others—but ultimately no one knows what the future holds.
On the other hand, while the past is not always a blueprint for the future, it can shed a little light.
Since the end of World War II, there have been approximately 14 bear markets. On average, it takes roughly 23 months to recover. This is an average based on historical data, but the upswing could take a shorter amount of time or a longer one.
In less optimistic news, a bear market is often followed up by a recession, although this is a difficult thing to predict.
In more optimistic news, all bear markets eventually lead to a longer and more robust bull market. This is hardly new information, but rather an observation of data from similar economic activity in the past. Based on past experience, we know it is likely that the stock market will eventually correct itself.
The question to ask is not about “if” but “when.”
Plan and Take Action
Whether you are buying the dip at a fortuitous time, or have picked the right moment to bail, everything comes down to timing. And not just timing, but planning as well.
If your portfolio can afford to take a hit and there is ample time for it to recover, you may not need to change much. If you are close to retirement and your portfolio is sufficient enough to cover your living expenses once you retire, is it worth taking a risk by investing in volatile funds?
Start by asking yourself what amount of your portfolio you can lose without undergoing a major lifestyle change when it’s time to distribute. Then ask how much of your portfolio you would have been comfortable losing before you started to panic.
Where is the red line for you?
The first question is objective; the second is much more subjective. Your answers do not necessarily have to align. However, considering these questions will give you insight into where you currently stand, and in which direction you should be heading.
The Epoch Times Copyright © 2022 The views and opinions expressed are only those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Image by Oleg Gamulinskiy from Pixabay.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
