Greetings all, Welcome to our monthly newsletter which focuses on current events and is provided only to our ongoing clients. This is meant to be a deeper dive into issues that are front and center in the minds of our clients and we encourage you to reach out if you have any questions or comments on any of the points mentioned. Have something you’d like to learn more about? Let us know and we will be happy to cover it in one of these newsletters. If you haven’t yet, take a listen to our podcast, The FI Entrepreneur. We just finished Season One and are starting to organize and record Season Two where we will spend more time digging into the how tos of entrepreneurship and financial independence. We also are planning to interview a number of guests, so if you or someone you know is active in the entrepreneurial or financial independence pursuits, please reach out and let us know! General Market and Outlook – As has been our habit in the last few months, we lead off with a general market outlook. As of writing this newsletter in mid-October, the S&P is down 23.32% YTD and this is after a strong 2.65% gain in the previous session. However, we believe the market is getting ready to turn around and we hope the next 12 months will prove far kinder than the last 12. We’d like to share a few informational sources you might find interesting.  The first is from Ben Carlson’s Animal Spirits podcast. The title of the episode is Long Term Bullish and even if you don’t have time to listen to the episode, we recommend you spend some time looking through the charts that are presented. At the very least, take a look at the first chart presented. There you’ll find historical data that show a great trend toward positive returns in the years following declines in the stock market of 25% or more. Since 1950, there is only one time where the S&P 500 declined by 25% or more and then didn’t post a positive return in the following year. The average decline is -37.6% and the average return the following year is 21.6% in the chart referenced. We can’t be sure when things will turn around, but we can be confident they will.  There are a number of estimates on this, but the average Bear market is most often estimated to be around 300 – 400 days long. Our current Bear market has been running for about 285 days. If we had to make a guess, given the current economic conditions, we could easily see this Bear market lasting another 3 to 6 months and increasing loss in the stock market by another 10% to 15%. Check out this article from Investopedia for some more historical perspective on Bear markets.  The main takeaway here is that we don’t know when this current downtrend will end, but it will and when it does, you want to be invested in the market because that is the only way to be on the ride back up. Most gains in the stock market happen in short spurts and if you have reduced your holdings or paused your automatic investments, you are going to miss out on those gains.  Series I Bonds –  On the flip side, for money not needed for the next year (the funds are locked for the first 365 days), like a mid-term emergency fund. Currently, Series I bonds are yielding 9.62%. This rate is good for the first 6 months of purchase and then will reset to prevailing rates. Analysts are expecting a drop in the rate to the mid 6% range. This is a good thing, as it shows that experts are seeing signs that inflation is decreasing. If you have some cash on the sidelines and don’t want to expose it to the volatility of the stock market, then Series I bonds are a good place to park the money. The 9.62% rate will be readjusted at the end of this month, so you only have a few days to lock this in if you are interested. Prior to making the investment, reach out to us so we can discuss your situation and fully go over the details of this investment.  Inflation and Interest Rates –  Here also, we believe we are about to see a change happen. We are as certain as we can be that the Fed will increase interest rates again in November, probably by .75% as they have previously done. Once this is done though, we are less certain about future moves. This is for several reasons. First, inflation seems to be slowing down although the Fed is not willing to declare victory just yet. Second, a major driver of inflation, the residential real estate market is showing signs of cooling. As interest rates have risen, so too have mortgage rates, making existing homes more expensive and causing would-be buyers to delay their purchases. Limited supply in the housing market should keep prices relatively stable, with less rapid growth than has been seen previously. Third, the dollar is just too strong internationally and only continues to strengthen as the Fed increases interest rates. This causes problems around the world and the US will face pressure to slow down their rate increases. Check out this podcast for an excellent primer on how a strong dollar affects the rest of the world.   Student Loans –  Earlier this week, the official application for student debt cancellation was released. This allows student loan borrowers to receive up to $20k in debt cancellation (if they received Pell Grants, $10k if they did not). There are income limits to be aware of, $125k for individuals and $250k for families. Additionally, four states at this time are expected to tax the forgiveness if you do receive it. The application is simple and is only expected to take five minutes or so. There is no detriment to filing it out, so if you think you are eligible, you may as well give it a shot. Lastly, there are a couple of questions remaining involving legal challenges blocking the program, but we should have more clarity there by the end of the week. Thank you so much for taking time to read our newsletter. We hope you’ve found some value here and in our services. If you have, please consider passing our information along to friends and family for whom you think our services would be a good fit. A referral is the greatest compliment we can receive!  Have a great month and we’ll see you next time! Best wishes,  The Bona Fide Family