Happy New Year! We hope this year brings you health, happiness, and success.

A quote from one of our earlier letters recently caught a client’s attention:

“Investors lose more money preparing for a market decline than in the actual decline.”

We revisit this quote because it captures the essence of successful investing. Rather than bracing for the next downturn, we focus on preparing for the next recovery.

Looking ahead, predicting the market remains as challenging as ever. The recent spike in inflation has drawn comparisons to the 1970s. But we believe that analogy falls short. In that era, the Nixon administration took the U.S. off the gold standard, imposed price controls on oil, and banned soybean exports — actions that led to long-term economic problems. Today’s challenges appear more cyclical and likely to ease over time.

Consider the auto industry: once semiconductor supplies normalize, we expect a flood of vehicles to enter the market. That increased inventory could push prices down and help bring inflation measures back in line.

Employment trends are also notable. Despite supply chain disruptions and the typical staff reductions associated with recessions and pandemics, demand for workers remains exceptionally strong. Job openings are at record highs, while both new and long-term unemployment numbers are at record lows. These indicators suggest there is still a great deal of economic activity to support.

Katz Family Financial