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Just because inflation may have peaked doesn ’ t mean it ’ s gone .

By Jennifer Lea Reed

“ We had one of the worst starts of a year , and in everything , not just equities . Stocks down a lot , and bonds giving no security . Most investors have been the most pessimistic they ’ ve been since 2009 , even more so than during the pandemic ,” says Ryan Detrick , chief market strategist at Carson group in omaha , neb . “ But now we ’ ve had a pretty solid earnings season . There ’ s been a massive drop in commodities , peak inflation seems to be here , and there ’ s an extremely strong jobs employment backdrop . If we avoid recession , we could have a pretty good time .”

“ Pessimism heading into the earnings cycle was very high , some of the most bearish positioning we ’ ve seen ,” agrees David grecsek , managing director in investment strategy and research at Aspiriant , headquartered in los Angeles . “ our take on things now is it ’ s great to have had a rally and clear some of that pessimism out .”

“ I ’ m feeling more relaxed that the inflation numbers seem to be on the right path ,” adds Jason Blackwell , chief investment strategist at Boston ’ s Colony group . “ However , one month doesn ’ t a trend make .”

As these investment advisors and others wait to see what happens next with inflation , with the fed , with employment and possible recession , they say they ’ re crunching historical data for clues to some of the possibilities for future trends and making small adjustments to their portfolios .

Detrick , for example , looks to midterm election trends going back to World War II for signs that more good news is on the horizon . “ Historically , midterm years are quite volatile . The largest pullback was 17 %, peak to trough , and we knew that coming in to 2022 ,” he says .

But the bounce-backs have been equally thrilling . “ The first three quarters aren ’ t so easy . But once you get to the midterm election and you go one year out , we ’ ve been up as much as 26 %, and two quarters out , up 15 %,” he continues .

With that in mind , Detrick says he ’ s remaining neutral right now in tech and following up on his focus earlier this year in healthcare , energy and materials with more investment . “ We tilted value over growth ,” he says . “ And maybe a mild recession wouldn ’ t be so bad , like in 1990 when we were out of it before we knew we were in it .”

The real wildcard in Detrick ’ s mind , he says , is what will happen with Taiwan and China , since the invasion of Ukraine by Russia is already priced into the markets . “ An 82-year-old woman just went over there , and you saw what they did in response ,”

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