So on September 13, 2022, the Consumer Price Index (CPI) reported as 8.3%. This figure shows that inflation is still high as expected. This figure shows an increase of 0.1% since last year.
The Stock Market responded with a huge sell off which is the worst since June 2020.
The DOW (Industrial stocks) fell nearly 1300 points, the S&P 500 (large cap stocks) also falling about 4.3% and the Nasdaq (technology stocks) fell over 5%.
A few key factors:
1). This was expected, inflation was not going to just drop to 4%. The Federal reserve pumped so much money into the economy and this is what happens when they stop.
2). As the Fed chair Jerome Powell warned last month, the Fed will keep on raising interest rates until inflation reduces to a 2% expected goal. The Fed meets next month and will likely increase interest rates by another 75 basis points or 0.75%.
3). Things will get really bad until they get better.
4). This too shall pass, even though the stock market is in bear market territory, those of us in the income accumulation stage should continue piling up stocks.
5). I am still bullish on stocks. I don’t see utility in bonds. This is the time to buy quality stocks especially those with huge discounts and those who pay dividends (Tech stocks, financial stocks, utility stocks, industrial stocks etc.). Stay away from companies with poor balance sheets.
6). This is not the time to sell your stocks because they’re down. By doing so, you will lock in your losses and lose money.
7). As Warren Buffet says, "if you told me there was a guaranteed recession next year, I will still be buying and selling the same stock."