Q3 2022 Summer Newsletter

Reginald A.T. Armstrong • The Armstrong Report

The bear market we felt was overdue is upon us. It is not a time to panic, but it is a time to soberly assess the environment.


The economy is likely in recession or rapidly approaching one. If there is a silver lining it is that recessions tend to kill inflation. If we escape recession, we likely will face stagflation—an environment of slow growth but elevated inflation. Either way, inflation will likely be with us for a while, so later in this article, I’ll mention a few inflation-fighting strategies.


Both stocks and bonds are down sharply, with only commodities doing well in the first half of this year. Stocks are no longer frothy, but still expensive. Keep in mind that bear markets outside of recessions are relatively mild; within a recession, they tend to be far more severe. In my opinion, it is not yet time to increase stock exposure. For bonds, the damage has been unexpectedly severe. While they have lost much less than stocks, the fact they are down has been tough on conservative investors. Don’t despair; bonds are fundamentally different than stocks and losses tend to be on the shallow end of the pool and far more temporary. It is likely that in the second half of this year bonds will perform much more in line with expectations.


Just a few thoughts on what investors can do in times of inflation. These are not recommendations—just things to consider. Even if inflation has peaked, the inflation rate will likely take 18 months or so to get back toward 3%.

  • Review spending and account withdrawals. Consider lowering/reducing.

  • Consider contributing as much as possible to retirement plans if still working.

  • Consider working a bit longer.

  • Discuss with your wealth manager about diversifying (if not yet done) into inflation-sensitive investments.

  • Perhaps delay claiming social security benefits. Not only will you likely get an 8%+ increase due to inflation, but for every year you delay, your benefits increase approximately 8%.

  • Go to www.treasurydirect.gov and review whether US Treasury I-bonds (inflation-linked bonds) are worthy of consideration. These can only be purchased directly from the Treasury.

Thanks for your continued trust. Hang in there.

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The opinions in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. All performance referenced is historical and is no guarantee of future results

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