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Market outlook: Through the ups & downs, take a long-term view

Man looking through binoculars

As of Oct. 12, 2022

This summer, I had the privilege of playing a round of golf with my neighbor, Sonny, on his 100th birthday. Talk about a long-term perspective! While we played, Sonny shared stories from his life, and I’ve been reflecting on them since. As you’d imagine, Sonny has lived through a lot of ups and some downs in his 100 years.

The markets also experience ups and downs, and the first three quarters of the year have been tough. As measured by the S&P 500 index, it was the worst nine-month period since the financial crisis in 2008-09 and the third worst three quarters to start a year since 1931. Yet, the U.S. still outperformed most other markets globally.

Often when stocks go down, bond values go up as interest rates typically decline in a weakening economy. However, with the persistent inflation we’ve seen, bonds haven’t provided any refuge as rates have risen sharply. Despite the volatility, I’m proud of the results our investment team has delivered.

The Federal Reserve (Fed) has been hiking short-term interest rates at the fastest pace since the 1970s but will likely pause in early 2023. Employment continues to be strong, but we should expect to see some softening as the economy digests higher interest rates. The housing market will probably continue to slow.

With rising rates, however, it’s now possible to earn yields on fixed income that we haven’t seen in many years. Stock valuations have come down meaningfully. Returns going forward have the potential to be attractive. I often remind folks to invest for the long term, though I know it can be hard to do, especially during periods of market volatility.

I’ll close by circling back to my day with Sonny. I’m confident the markets and economy will eventually return to growth, as has always happened in the past. In the meantime, keep a long-term perspective and know that our team of investment professionals is hard at work managing the assets you trust to us.

David and Sonny after a round of golf on Sonny's 100th birthday.

The views expressed may change as market or other conditions change and may differ from views expressed by other Thrivent Asset Management, LLC associates. Actual investment decisions made by Thrivent Asset Management, LLC will not necessarily reflect the views expressed. This information should not be considered investment advice or a recommendation of any particular security, strategy or product. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance.

Thrivent Asset Management, LLC, an SEC-registered investment adviser, provides asset management services for Thrivent Mutual Funds and is a subsidiary of Thrivent.