The Prudent Retiree - February 16, 2022

Two years ago, in a different world far, far away before Covid, Prudent Retiree referenced Marvin Gaye in that month’s report on the market. We all know what happened next. Since then, we have been chronicling what’s been going on in the market during this era of never-ending turmoil.

Marvin Gaye was the King of Motown with a long string of hits in the 60s and 70s. His penultimate album, What’s Going On, was released in 1971. Lyrics included, “Picket lines, picket signs, don’t punish me with brutality” and “War is not the answer.” He could have been singing about 2022 as sure as he was 1971.

The point is that “bad” is always what’s going on in the economy, society, and the world around us. It is easy to be rattled and make a mistake with your investments. Our instincts are to assume bad news means bad markets. 2008 is still seared into investment psyches.

I could write paragraphs about all the “bad” that is going on right now. You know—inflation, wars and rumors of war, Covid, masks, education, and political bickering to name a few. What’s been going on with the market during all this? Two years ago, the S+P 500 was 3380. Today, as I write it closed at 4471. That’s a substantial increase, not a collapse. There have certainly been corrections and we ride those out. If you listened to the market these past two years you were concerned, but not rattled. No mistakes. You have done very well.

The market is currently in a correction. There is heightened risk, but no reason yet to believe it’s 2008. Gaye sang, “You know we’ve got to find a way to bring some understanding here today.” That investment advice he didn’t know he was giving is listen to the market, not what’s going on around us. Maintain your current allocations and monitor the risk. Prudent Retiree will make you aware of what’s going on and when it’s time for a change.

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