• The market downturn is disproportionately effecting the wealthiest Americans since the top 1% own more than half of all stocks & mutual funds. Elon Musk and Jeff Bezos alone have both lost over 39% of their wealth since their peak net worth was achieved last year. Now, however, middle class Americans may be effected as well as higher interest rates start to impact real estate. The top 1% hold less than 14% of real estate while the bottom 90% own more than half.
• After eight straight weeks of declines the Dow is in its longest losing streak since 1932. The S&P500 is also down over 18% in 2022 and close to entering an official bear market. Considering the fact that since the 1980s the US has slipped into a recession four of the six time the Fed increased interest rates many investors are bracing for the worst. On average the S&P500 has declined by 36% during a bear market.
• If the stock market does enter into a bear market it is not necessarily bad for investors willing to maintain their stock exposure. Since 1950 the S&P500 was higher one month after entering a bear market 83% of the time with an average gain of 3.7%. Additionally, it was higher one year later 75% of the time with an average return of 17%.
• For the first time ever, gasoline is now above $4 per gallon in every US state. California is particularly hard hit with gas now above $6 per gallon. This will continue to impact inflation as energy prices are already responsible for over 2% of the year-over-year change in the CPI.