Figured this has come up from time to time related to the Covid pullback and stimulus supported recovery. We seem to be in what can be considered a "normal" market cycle.
In terms of the market outlook, we expect lower returns this year relative to the last few years and we view recent volatility as normal. In 2021, the market was ahead of itself, especially as we closed out the year, so we started 2022 with the market at an all-time high and at a stretched valuation. The market is in the process of adjusting to the reality of no quantitative easing and higher interest rates. Overall, it is normal for the market to have at least one drawdown of 10% or more in a given year. We just haven’t seen this normal downside volatility in a couple of years.
Here is a good piece that talks about inflation, volatility and Fed expectations.
City National Rochdale - On the Radar
In terms of the market outlook, we expect lower returns this year relative to the last few years and we view recent volatility as normal. In 2021, the market was ahead of itself, especially as we closed out the year, so we started 2022 with the market at an all-time high and at a stretched valuation. The market is in the process of adjusting to the reality of no quantitative easing and higher interest rates. Overall, it is normal for the market to have at least one drawdown of 10% or more in a given year. We just haven’t seen this normal downside volatility in a couple of years.
Here is a good piece that talks about inflation, volatility and Fed expectations.
City National Rochdale - On the Radar
