If you’ve found yourself asking, “What is going on with the markets?” — you’re not alone.
Most recently, and especially this year, I’ve been asked more frequently than ever what I think about the markets. These questions come from both clients and friends. At first, I found it puzzling. Why this year? Why more than any other?
Then it hit me: people aren’t just curious — they’re confused.
And honestly, that confusion makes sense.
Throughout most of our investing lives, we’ve operated under a simple assumption:
That logic feels intuitive. It’s how many of us learned to think about investing.
But in recent years — and particularly this past year — that relationship has flipped on its head.
Take a recent example. We received what would traditionally be considered good news:
Under normal circumstances, this kind of data would push markets higher. Instead, the market declined.
Why?
Because investors immediately assumed that higher wages and continued spending could fuel inflation — and that, in turn, might cause the Federal Reserve to keep interest rates higher for longer.
On the flip side, we’ve seen traditionally bad economic news — like rising unemployment — spark market rallies.
Why would that happen?
Because higher unemployment raises the possibility of rate cuts, which markets tend to welcome.
So now we’re living in a world where:
As economist Tim Peters once said, “If you’re not confused, you’re not paying attention.”
This reversal in how markets respond to economic data has understandably caused investors to waffle over the past couple of years.
Part of the blame, in my view, lies with the media. Economic data is often spun to fit a preferred narrative — and for much of the past decade, that narrative has leaned heavily negative.
Another factor is our collective obsession with the Federal Reserve.
We pay far too much attention to every Fed statement and every interest rate prediction — and that includes economists, at least temporarily. When short-term rate expectations dominate the conversation, long-term fundamentals often get drowned out.
Here’s the encouraging part.
Despite all the noise, negative headlines, and short-term reactions, the markets have actually performed quite well. Why?
Because markets, over time, tend to ignore the chatter and return to what truly matters: fundamentals.
Corporate earnings, productivity, innovation, and long-term economic growth continue to support the broader market narrative — even when headlines suggest otherwise.
This validates why staying invested and focused on long-term fundamentals has worked for years, even during periods of confusion.
There are signs that we may be slowly moving back toward a more traditional market environment — one where:
But this transition won’t happen overnight.
For true normalcy to return, inflation needs to be firmly in the rearview mirror. While data shows inflation has declined significantly over the past 18–20 months, patience will still be required.
Market confusion doesn’t mean something is broken — it often means we’re in a transition.
Rather than reacting to every data point, headline, or Fed rumor, investors are better served by:
Confusion is part of the process — but clarity often comes with perspective and patience.
Financial advisor for those who have saved $1,000,000 or more for retirement