With June now over, we can say that the S&P 500 has suffered its toughest first half since Richard Nixon was in the White House. It was a rout for the history books, with the equity gauge down about 21%. Investors in consumer stocks witnessed a wipeout of $1.8 trillion in market value. That said, the S&P is now simply back where it was in March of last year.

The S&P 500 has plunged 21% since January, losing more than $9 trillion in market capitalization and suffering its worst first half of a year since 1970, while the Nasdaq Composite and Dow Jones fell 30% and 16%, respectively. Bitcoin has tumbled nearly 56% ytd to under $20,000. One of the only pockets of the market that gained in the first-half was commodities, with crude oil going from $75 to well over $100 a barrel and U.S. gas prices nearly tripling before falling back in recent weeks.

The big question is when will normality return?

Future Wealth’s View

The last twelve months have had all the makings of a perfect storm – trillions of dollars pumped into the economy while the Fed was sleeping at the wheel, consumers wildly spending the free money given to them on the pretext of pandemic support, Russia blindly invading Ukraine putting all commodities into a shortage and of course, the end result was high inflation that Wall Street was not prepared for.

To be back to normal means inflation will have to come to previous levels without risking a recession that could drive up unemployment, lower wage growth and kill consumer spending. The challenge to successfully engineer a good result is too great to accurately predict the outcome. 

For investors, it means hunkering down, doing the research and not being rash or greedy. It also means respecting the fact that markets don’t always go up and random investments without adequate research often end up being decimated in a downturn while judicious investments tend to hold up better in tough market conditions. The reality for now is that the stock market is too risky, bonds are losing value and cash is simply not keeping up with inflation.

When there is nowhere to invest, it is best to turn our attention to what grandma said “Children are the investments and grandchildren the dividends.”