At the time of writing, the global markets have experienced a sharp decline since the beginning of the year, with an 11% drop from January highs. A host of factors, including high inflation, supply chain disruptions, regional conflict in Eastern Europe, and the ongoing COVID-19 pandemic, are hindering global growth.

Although these issues present concerns, the market has already priced them in. The efficient market hypothesis suggests that all widely known information is already factored into the market. However, if the situation deteriorates beyond what is already priced in, the market may continue to decline.

As investors, our role is not to predict the future, but to react to available information and data and position our assets accordingly to generate positive returns. While we anticipate a volatile 2022, we expect a rebound after the midterms in the second half. We see inflation as temporary and expect it to ease as supply chains correct and rates rise, decreasing demand. We do not believe that Russia desires war and anticipate that the conflict will abate within the next six months. Additionally, as COVID-related issues decrease, we expect restrictions to continue to ease in the spring and summer.

While we cannot predict the future, we expect the market to rebound once these issues are resolved. Bear markets are typically caused by unforeseen factors that have the power to ruin trillions of dollars of GDP or overly euphoric sentiment. In contrast, corrections can happen for any or no reason, often linked to sensational news headlines. Only time will tell whether this is a bear market or a typical correction, but we are optimistic that it is the latter.

Nothing herein is intended to be investment advice. Investment in the stock market involves risk of loss, including the loss of principal. Past performance is no guarantee of future returns. The content contained in this article represents only the opinions and viewpoints of the Interlaken Advisors editorial staff.