October 2022 PDS Planning Market Commentary


Volatility has certainly picked up, with 25% of all trading days so far this year experiencing declines of 1% or more. According to Bespoke Investments, the only other post-WWII years with a higher frequency were 1974 (26.6%), 2002 (28.6%), and 2008 (29.6%). Market performance has deviated far from its historical averages of 8-10% returns. But, so too were 2019, 2020, and 2021 when the S&P 500 was up 28.9%, 16.3%, and 26.9% respectively. In fact, it deviates in almost all years from that average, yet we only focus on the years where the deviation is in the red. You can see in the chart below (S&P 500 annual returns) that there are far more years in the money than not. And occasionally, the red bars take a pretty hefty drop, but those are necessary in order for us to have exuberant recoveries. Losses like this don’t feel good, but this is normal. They can’t all be green bars – without the risk of red, there would be no reward for accepting the risk & volatility.

Source: Macrotrends

So what is causing the volatility? The majority comes down to the Federal Reserve’s response to record high inflation. They have been increasing the Federal Funds rate in aggressive fashion in attempt to cool inflation and the economy. Unfortunately, they are behind the curve and will need to continue raising rates for the near-future. We would expect this elevated amount of volatility to continue until inflation starts to ease and the Federal Reserve considers slowing their plan to raise rates. We urge investors to not make an emotional decision with their portfolio during these times of stress and maintain the course. Keep calm and invest on.


IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PDS Planning, Inc. [“PDS”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from PDS. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PDS is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the PDS’ current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.pdsplanning.com. Please Note: PDS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to PDS’ web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a PDS client, please contact PDS, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.