The Rise stock portfolio dipped -2.02% in the last quarter as record inflation and hiked interest rates plagued the market. Despite solid corporate earnings and good employment figures, analysts expect the US stock market to keep experiencing more declines if inflation does not start to slow down.
However, this is the best time to invest in stock as prices are low, and you take advantage to benefit when the market rebounds. So fund your Rise stock plans today!
Inflation and the Stock Market
The US stock market this year has declined 28%, mainly from investors’ fears of the impact of record inflation and hiked interest rates by the Federal Reserve. The Rise stock index so far has underperformed the market, returning -32% year to date, no thanks to these headwinds.
In the past three months, we have seen the Federal Reserve hike interest rate by 0.75% three times to slow down inflation, sending investors’ confidence downwards and erasing hope that the market could recover from previous losses each time.
July started with an influx of better-than-expected corporate earnings results as many blue-chip companies recorded solid growth in revenue and profits despite strong inflationary pressures, which means revenue from charging higher prices outgrew their cost of production. Also, over 65% of companies on the S&P 500 beat analysts’ estimates and recorded more robust earnings per share than in the same period last year. As a result, the stock market gained 9.22% for the month.
However, in August, a cocktail of hotter inflation at 8.3% and better-than-expected employment numbers meant that monetary authorities increased interest rates and sent the stock tumbling, losing all the previous gains it had recovered. The US stock market closed the month down 4.08%, while the Rise stock index gained 3.58%, thanks to our portfolio hedging positions.
It was a bloodbath in September as the stock market delivered the worst month in the calendar year. Inflation and hiked interest rates eventually sent US stocks to bear market territory, and we expect further declines with more raises.
Our Portfolio Moves
During the quarter, we evaluated our existing portfolio positions. We added new companies where we saw opportunities for growth while reducing our positions in companies that exposed us to too much volatility.
After careful and thorough research, we added Marqeta, a cloud software company that helps other companies issue cards to their customers for various transactions. We also increased our portfolio hedges and added more to our defensive positions. We increased our holdings in ExxonMobil, Berkshire Hathaway, Amazon, and Bill.com, among others. We have also started building exposure to dividend stocks and solid cash-flow companies. Our goal is to position your investments to benefit from the volatility while adding other assets that can hold steady even in recessions.
A drop in the stock market is not necessarily a bad thing. Stock markets don’t always go up; they sometimes go down. And when they do, smart investors buy significant assets at much lower prices than in normal periods. A downturn like this is the period when investors make fortunes, provided they have the patience to stick out the short-term issues and invest for the long term. Continue to buy or fund your Rise plans as we go shopping for bargains as prices drop, which will pay off handsomely when the prices bounce back up.
As always, Rise does the work, so you don’t have to.