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What history tells us about today’s economy and markets

RL142 — What history tells us about today’s economy and markets

On the Retirement Lifestyle Show, Roshan Loungani, Eric Olson, and Adrian Nicholson break down the latest edition of JP Morgan's Economic and Market Outlook. They discuss the current economic and investment landscape and how investors can use this information to make concrete investment decisions.

[02:32] JP Morgan's Guide to market

[03:55] Returns and Valuations by Style

[06:55] Using Data and Valuations to Make Investment Decisions

[08:26] Large Growth Versus Large Value

[10:10] The Case For Long-term Value Investing

[14:04] Growth Rates in the Economy

[18:55] The Labor Market is a Bright Spot in the Economy

[23:55] Inflation: CPI Versus Core CPI

[28:43] Things That Contribute to Headline Inflation

[31:10] Federal Fund Rate Expectations

[32:42] Bull and Bear Markets

[36:35] The Strong Correlation Between Depth of Decline and Months to Recovery

[41:32] Global Market Expectations

[43:36] The Consumer Sentiment Index

[48:43] Global Valuations

[52:38] The S&P 500 Price Index

[58:20] Highlights From Adrian's Wedding

For more links and the full show notes keep scrolling down!

Roshan Loungani can be reached at or at 202-536-4468.

Erik Olson can be reached at or 815-940-4652.

Adrian Nicholson can be reached at or at 703-915-8905.

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Full Show Notes:

The Recession Question

The rule of thumb definition of a recession historically has been two consecutive quarters of the GDP shrinking. So, with everything happening in 2022, does that mean we're in a recession already? Technically, yes. But here's the thing; there are a lot of things in this economy that just don't make sense. Every trend you look at won't feel like the conventional understanding of what a recession is. For example, when you look at the third quarter numbers, we actually had 2.6% growth on a quarterly basis. Year on year then means that the economy is 1.8% larger than it was the year before. Yes, the U.S. economy might be teetering on the edge of recession. But whether or not we're actually in one, like we always say, is still anyone's guess.

Consumer Confidence and the Stock Market

For most investors, 2022 has to be one of the most disappointing years to be an investor. The pandemic, sharply rising inflation, falling stock prices, and Russia's brutal invasion of Ukraine, combined with numerous other factors, have driven consumer confidence to an all-time low. When investors don't feel confident about the markets, their natural tendency is to be cautious. Some go as far as selling all their risky assets in general, focusing more on risky stocks. However, history has repeatedly proven that you shouldn't let how you feel about the economy influence your investing decisions. For example, in the JP Morgan report, on average, buying when confidence was high returned 4.1%, while buying when confidence was low returned 24.9%. However, we're not suggesting this might be a great time to buy. We are suggesting that when planning for end-of-year investing, you should focus more on the data and the valuations rather than how they feel about an investment.

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All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.

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