Page 25 - BusinessWest July 11, 2022

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Life’s a Journey. L L e e t t u u s s w w a a l l k k t t h h e e r r o o a a d d w w i i t t h h y yo o u u . .
I I t t ’ ’s s w w h h a a t t w w e e d d o o . .
Pat Grenier, Principal
RR, CFP®, MBA [email protected]
MA
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It’s Not Just
About the Money
Investing Is About Having the
Proper Frame of Mind
By Pat Grenier
We have a well laid out plan for how our wealth-building investment portfolios will provide us with the lifestyle we want, confidence in our financial strategy that we believe we deserve, and the legacy we want to leave our loved ones.
Inflation, rising interest rates, high gas prices, the war in Ukraine are non-trivial distractions that test our ability to stay calm and focused. As Mike Tyson once said, “everyone has a plan ‘till they get punched in the mouth.”
For many depending on their 401k plans, their IRAs and/or their investments, this is a gut-wrenching feeling. It certainly is painful to watch the value of our monies depreciate — especially in an inflationary environment. Emotions can take over and cause anxiety, nervousness, and fear. You are not alone. These feelings are real and
may drive the person into a decision that may be irrational, absolutely the wrong one at the wrong time.
Until we address these feelings with facts and common sense, we will not be able to make rational decisions about our investments and the impact it will have on our lives.
As a start, let’s put the current market environment in perspective. As with any market decline, we don’t know when it will hit bottom or how long it will take for markets to come back. What we do know, and history has proven, is that market corrections occur periodically and have been short-lived:
As much as anyone would like to avoid these declines, they are an inevitable part of investing.
Looking back at the 15 largest single-day percentage losses in the S&P 500 since 1960, we see that investors are rewarded for staying the course:
Warren Buffett said it best “American magic has always prevailed, and it will do so again.” Can you think of a year where there was not an event that had a negative impact on the economy and investments? It is reassuring to know that despite these annual headwinds, the U.S. economy is resilient and has always recovered.
As much as the fearmongers want us to believe the world is falling apart, we should know better than to listen to the 24/7 negative news cycles. For our own sanity, we need to focus on the positive. Our economy continues to open after the closures due to the Covid pandemic, there are plenty of jobs for anyone that needs one and consumers are still spend-
Richard F. Burkhart, CPA and Salvatore J. Pizzanelli, CPA, JD, PFS
The talented team at Burkhart Pizzanelli
Accounting
Julie M. Quink, CPA and Deborah J. Penzias, CPA
The talented team at Burkhart Pizzanelli provides
provides expertise in a full range of accounting
and financial services. Feel free to call on us at Consulting 413.734.9040.Feel free to call on us at 413.734.9040.
expertise in a full range of accounting and financial services.
201 Park Avenue, Suite 2, West Springfield, MA
201 Park Avenue, Suite 2 • West SpringfieldR, eMtAir0e1m08e9nt Plans T: 413.734.9040 • F: 413.781.5609
T: 413.734.9040 • F: 413.781.5609 • www.bppc.com www.bppc.com Tax Planning
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S&P 500 Index 1942 - 2022
Type of Decline
-5% or more -10% or more -15% or more -20% or more
Average Frequency*
About 3 times a year About every 16 months About every 3.33 years About every 5.75 years
Average Length**
40 days
129 days
240 days
339 days
Last Occurrence
April 2022
April 2022
March 2020
March 2020
Source Bloomberg 4/29/1942 – 4/29/2022 ** Measures from the date of the market high to the date of the market low
*Assumes 100% recovery rate of lost value
S&P 500 Index Average
Date 1 Day Return 1 Year Later 3 Years Later 5 Years Later 10 Years Later
1960 to -8.85 +30.29 +12.56 +11.26 +11.37
Present
Source: Bloomberg. Performance is price return only (no dividends). As of 4/29/2022. Returns are average annualized returns except for those less than one year. In that case, they are cumulative.
ing. To our surprise many corporations for the first quarter of this year reported
Money
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JULY 11, 2022 25