When asked to predict where the market will be at year end, here are my thoughts:
Hopeful: It could return to where it started, or even above that. War ends, energy prices fall, inflation cools from slowdown in demand, and supply chains become fixed.
Fearful: It could stay at its 20% loss, or even go down another 10%. If you are taking money out, we are prepared and should have sufficient years of shorter-term, high quality bonds to sell (instead of stocks) to ride it out until stock prices eventually return.
Realistic: We don’t know because both scenarios are equally plausible, but either way we are prepared based on your financial plan which uses well-diversified, ultra-low cost, quality investments.
“The mistakes we make as investors is when the market’s going up, we think it’s going to go up forever. When the market goes down, we think it’s going to go down forever. Neither of those things actually happen. It doesn’t do anything forever.” - John Bogle, Founder of Vanguard