Staying Positive During Times of High Inflation and Market Volatility

Joe Cramer |

It’s almost impossible not to feel anxious with daily news reports about high inflation and the dips and dives of the stock market. However, it’s not all bad news.

What’s Causing Inflation?

Although inflation isn’t a great thing, it’s important to look at what’s causing inflation. In addition to high gas prices and food costs, there is a wide array of factors that might otherwise be interpreted as a strong economy.

Lingering effects of COVID-19, continued supply chain disruptions, the Russia/Ukraine conflict and the stimulus payments that flooded the economy with money, are the negative events propelling inflation. However, there are other factors that are fueling inflation that are beneficial market forces.

Strong Labor Market. A surging job market is the sign of a healthy economy. According to the Bureau of Labor Statistics,  it took six years for the labor market to fully recover after the 2008 recession; yet, today the labor market has almost fully recovered after just two years.

Surging Retail and Business Activity. American households continue to spend at a healthy pace, according to data from Bank of America Corp credit and debit card accounts. Likewise, businesses have ramped up investment since the initial impact of the pandemic, especially in transportation equipment, information processing equipment and software according to Deloitte’s economic 2022 second quarter forecast. As the world reopens after the pandemic, consumers are eager to enjoy evenings out, vacations, home improvements, and purchasing goods again---all at the same time, which allows companies to raise prices. While the high demand is creating inflation, the cause behind—strong consumer and business spending—is a positive.

Higher wages. Due to the strong labor market, companies are deciding to increase wages to help retain talent. According to consulting firm Pearl Meyer, companies on average have given 4.8% pay increases this year compared to the average 3-3.5% cost of living adjustments.

While accelerating rents and gas prices are a burden for Americans, there are some positive aspects that are happening along side inflation.

Historically the Stock Market has Ups and Downs

Although market pull-backs may continue, it’s important to understand that these pull backs don’t define the market over the long haul.

If you take a calendar-year perspective, the stock market has gone up far more often than it has gone down. In fact, while drawbacks are common, so are recoveries.

Embrace a Long-Range View

Remaining committed to your investment plan is the number one action you can take that can help you achieve positive results. The popular saying, “it’s not about timing, but time in the market” is true.  According to J.P. Morgan Asset Management analysis, using data from Bloomberg, between January 1, 2002 and December 31, 2021, seven of the best 10 days occurred within two weeks of the 10 worst days. Six of the seven best days occurred after the worst days. The second worst day of 2020 — March 12 — was immediately followed by the second best day of the year.

Losses hurt more than gains feel good; however, selling out of the market after the worst days can result in missing the best days that follow, which underscores the importance of remaining committed to your investment plan.




The market is built to recover, which is why investors need to keep a long-term mindset. Stay focused and determined, and always keep the big picture in mind. Slow and steady wins the race.

The Value of a Financial Professional

Investors are often their own worst enemies. Successful investors invest when the prices are low and sell when prices are high. The average investor often does the opposite as shown in the graphic above. When the market rises, they jump in and buy high, hoping to get in a good thing. When the market drops, afraid of losses, they get out, selling when the market is low.

According to the Guide to Markets over the 20-year period ending in 2021, U.S. stocks rose an average of 7.5 percent annually. Bonds increased by 4.8 percent annually. The average investor’s returns didn’t come close. In fact, the average investor earned 2.9 percent a year.

As your financial advisor, I am here for you in good times and bad. I can answer your questions and provide objective guidance to keep your mindset fixed on the long term.

If you are not connected with a financial professional, now is a great time to get support. I welcome the opportunity to help you connect your money to your values and tailor a strategy to help you achieve your goals and aspirations over the long term.

Let’s talk.


More about the Author:

Joseph Cramer, CFP, Financial Advisor

Joe, resides in Indiana and graduated from the Carlson School of Management at the University of Minnesota with a BSB in finance, risk management, and insurance. 

He appreciates working with young professionals and families, especially those in the medical community. His areas of expertise include: holistic fee-based financial planning and coaching; asset protection strategies in the areas of specialty-specific disability insurance and life insurance; debt management; tax deferred strategies for funding education and retirement; and, wealth management.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.  This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security.  Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested.