In the Long Run, It's a Weighing Machine

From interest rates to inflation to housing, the economy is going through a rebalance. In a short time, we've seen big changes to parts of our economy. These changes have created more uncertainty, which financial markets can react to with more significant and volatile price swings. But, will it always be this way? We certainly don't think so.

In Headlines this Week

• The Job market is tight and unemployment low.

• The Fed continues on its path of trying to cool inflation by increasing interest rates.

• Existing home sales continue to decline as borrowing costs rise.

Focus on Housing

Let's compare payments on a new mortgage today versus one year ago. Last year, a $500,000 house with 20% down payment at a 2.88% mortgage rate equated to a monthly payment of $1,660. Today, at an estimated 6.29% rate, that payment would be $2,430, which is a 46% increase. That's a big deal.

"In the short run, the market is a voting machine but in the long run it is a weighing machine." -- value investor Ben Graham. Looking back at every other time in history, we expect markets and economies will find more balance again.

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