Lesson from a High School Student

RJ’s youngest daughter, Aster, is a senior in high school and has been enjoying the personal finance class she is currently taking.  In addition to the stock market game, where students research and select three stocks to follow over the course of the semester, the students also learn about investment basics.  During dinner, the Devick family was talking about the recent bout of stock market volatility and Aster wondered why clients get concerned since the markets are cyclical and eventually bounce back.  RJ told her she would understand that question better after she takes her Introduction to Psychology class at the University of Minnesota next year.  Investing has as much to do with emotion as anything else since most investors are often anything but rational.

Rising interest rates have been tough on stocks and bonds, but especially those stocks that were in a bubble.  According to Morning Brew, Netflix has recently lost most of its gains from the past five years.  High flying growth stocks need to continue to generate exceptional growth, or their stock price will suffer.  Many growth companies will report earnings over the next two weeks and hopefully their stock prices will hold up much better than Netflix did.  Quality companies with strong cash flows will most likely be the beneficiaries if investors continue to leave momentum stocks in droves.

As Aster told RJ, the markets are cyclical and bounce back.  Instead of focusing on inflation, war, and politics try to devote some time to enjoying Spring in whichever part of the country you live.  It is truly a time of renewal and hope.

Take care and be well,

The Bond&Devick Team