Over the past few weeks, I've been asked the same question by a number of very smart and successful people:

You might be wondering why there seems to be a disconnect as well.

It's a reasonable question because in a normal world, when the economy is doing well, the markets typically do well.

The problem is that we aren't living in a normal world right now...

...we're living in the Fed's Bizarro World. (Seinfeld, anyone? 😊)

To help make sense of today's unique bizarre environment, I'm sharing a summary of how we got here in today's email.

I'm also providing a handful of (free) year-end retirement planning cheatsheets.

Fed's Bizarro World: How We Got Here

In 2020, COVID-19 hit and we shut the entire economy down for a few months.

To avoid a financial crisis, the government sent out lots of free money.

When the economy reopened, people wanted to spend their money.

However, there were fewer goods to buy because global supply chains were slower to restart.

The result was high demand and low supply, which not surprisingly, caused inflation.

Initially, the Fed said inflation was transitory.

The Fed eventually concluded they were wrong...

...inflation was not transitory.

So they committed to rapidly increasing interest rates to slow down the economy and combat inflation.

The market has taken note of this aggressive shift by the Fed.

As a result, stocks seem to be falling when good economic news is released because it means the Fed will continue on its warpath until they get what they want.

In other words, the Fed is actively seeking bad economic news. It's why it feels like a bit of a hostage situation.

It will be interesting to see how the market responds to bad economic news as this probable Fed-induced recession takes shape.

If good news is bad news right now, does that mean bad news will be good news?

Will bad news actually cause the market to rise?

Or is bad news still bad news?

Is this making your head hurt? You're not alone. 🤕

That's the thing about Bizarro World -- nobody knows anything.

In light of this wild uncertainty, a logical question to ask is:

It won’t surprise you to know that the answer is the same today as it always is—exercise patience and discipline.

Because here are the only three things we know for sure:

1. 100% of all previous bear markets eventually ended.
2. 100% of all previous bear markets have been followed by bull markets.
3. The only way to guarantee we don't miss out on future gains is to stay committed to our investment plan.

As Kevin Bacon said in A Few Good Men, "These are the facts of the case, and they are undisputed."

In conclusion...

I understand it's not fun right now. Bear markets (and hostage situations) never are.

But the Fed's Bizarro World will end, and the market will eventually recover.

And historically speaking, the market typically begins its recovery well before they announce the "all clear."

Our job is to make sure we're there when it happens.

Before You Go...Grab Your Year-End Planning Cheatsheets

Here are a handful of helpful cheatsheets to help you tie a bow on your 2022 year-end planning:

• ​Issues to Consider Addressing Before End of Year​
• ​Should You Consider Doing a Roth Conversion?​
• ​Tax Cheatsheet and Important Numbers for 2022​
• ​Important Dates in 2022 for Individuals and Business Taxpayers​
• ​Important Milestones at Different Ages​

New Subscriber?

📖 Read last weeks newsletter article: Q3 Review of the Markets​

And, as always, please reply to this email with any comments or questions. I read and respond to every message :)

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Stay wealthy,

Taylor Schulte, CFP®