Today, I’m sharing five of my favorite investing & economic charts from the past month.

These charts cover topics such as:

• Market volatility
• Investing in gold
• Inflation...and more!

Before we dive in, did you catch this week's podcast episode?

Retirement, Taxes, and Investment Underperformance In this episode, I provide key takeaways from three of the BEST retirement articles I read this month. One of the articles makes a strong case for why taxes will be HIGHER in the future. Listen Now →

Favorite Charts (August 2024)

#1 - Volatility Returned in Historic Fashion

The volatility index (VIX) reached one of the highest levels in its history when the market dropped by...wait for it...9% from its all-time high.

There had been just two other instances of volatility spiking to these levels since 1990:

1. The Great Financial Crisis (08/09)
2. The "Covid Crash"

Think about that for a moment.

During a relatively minor 9% pullback, investor fear spiked to levels considerably higher than that of 9/11, the tech crash, countless debt ceiling disasters, and multiple wars.

To say that investors are a little "jumpy" right now might be an understatement.

#2 - Volatility is Perfectly Normal

What many investors sometimes miss is how incredibly normal volatility is.

As you can see in the chart below, 3% pullbacks happen about every 1.5 months.

10% corrections happen about once per year.

And bear markets (declines of 20%+) occur, on average, every 2.5 years.

Long story short, we should expect volatility; it's the price we pay for performance.

#3 - Gold Has Been a Poor Long-Term Investment

Aside from the fact that gold is almost exclusively a speculative "investment" (as are most non-cash-producing assets), I came across this chart showing how mightily it has struggled in its performance since 1980.

While gold was unquestionably at a mania-like peak in 1980, the fact that gold is still in negative return territory—on an inflation-adjusted basis—after more than 40 years is simply mind-boggling.

Say what you will about the timing choice here, but if 40+ years isn't enough time to recover to new highs, it should probably be largely ignored as a legitimate investment choice.

#4 - Inflation Is Mostly a Thing of the Past

While inflation continues to dominate the headlines, the last two years have thankfully been a consistent downtrend.

It's come down so far now that it's at its lowest level since April 2021.

There are certainly areas of the economy where we're still seeing high levels of inflation, but the broad trend continues to be encouraging and bodes well for potential rate cuts in the near future.

#5 - There Is Always a Crisis

If I could wage a magic wand and cause a single chart to pop up every time there was a crisis, this would be the chart.

Why?

Because it shows that there is, quite literally, always something to worry about.

One of our favorite investment truths is that, "It never feels like a good time to buy."

By extension, there are always legitimate-sounding reasons to sell as well.

That said, what separates successful investors from failed investors is that successful investors can look at each of these events—regardless of their uniqueness—and say to themselves:

With the recent bout of volatility seemingly behind us, we can and should shift our focus back to where it always should be—to the things you can control.

One of my favorite quotes about retirement planning is that it's a lot like driving your car at night:

In much the same way, we may never know what lies ahead.

But a well-constructed plan that accounts for a wide range of possibilities can help you prepare for the uncertainty and stay the course.

I hope this note helps you to feel encouraged and optimistic as we head into the holiday weekend.

Stay wealthy,

Taylor Schulte, CFP®