Will we follow the same historical path? The stock market has made significant gains in recent years. However, the S&P 500 has gotten off to a bad start in this period of high inflation.
Stock markets are not immune to inflation. Many factors affect it and one of the most important is interest rates. The Federal Reserve has raised interest rates over the past few years, which has caused inflation to fall slightly, but has caused the markets to fall because investors consider it too low. This is why it is important for investors to consider inflation when investing in stocks, as well as the interest rate.
Inflation will not disappear overnight, which is why we think the markets will fall until inflation reaches a decent level and interest rates gradually come down. We also think the Covid chart is perfect for getting an idea of how the S&P 500 will react over the next two years, if we follow the historical chart.
