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  • Writer's pictureJeran Van Alfen, CFP®

Catch 2022

Recently, I just finished reading Catch-22 for my book club. It was the first time I had read it.

It is a fictional story set during WWII and I found it darkly comedic, disturbing, and enjoyable and thought-provoking. A catch-22 is defined as: a dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions. I bring this up right now, because the markets are in quite a dilemma right now and investors may be feeling a bit of a catch-22.

Here's the catch…2022 is on pace to be the worst start ever for the bond market and the 3rd worst start ever for the stock market. That’s enough to make any investor queasy and want to avoid risk. At the same time, inflation is trending over 8% and the only assets that help us outpace inflation over time are risk assets.

So, what do we do?

Learn to respond and not react

“Do you have the patience to wait Till your mud settles and the water is clear? Can you remain unmoving Till the right action arises by itself?”

-Lao Tzu

When we see the markets in the red and our stomach clenches, it is natural to feel like we have to react. However, this is the time for mindfulness to kick in. Instead of reacting to news that has already happened it is better to pause, let any irrational feelings settle and then decide how to respond proactively to the information that we have.

Why is this important? Because when we worry about our investments, we are faced with another catch-22: We are worried that we will lose money, so we feel like we need to sell our investments, however money is not ultimately lost or gained until we sell. If we react irrationally, we may lock in the result that we are ultimately fearing.

Follow the rules

What rules? We should always invest with rules. If you haven’t set up some rules. I have listed the essential rules at the end. Our rules should be the boundaries for our emotions. They should force us to keep a cool head and stay focused on our goals. They should help us avoid mistakes.


We can’t control the markets or the inflation rate, but we can use our financial plan to make smart financial decisions. Sometimes we need to adjust. We may need to adjust our budget, our risk profile, or our expectations. If we do make adjustments, they should be well thought out and intentional.

Stay Centered

The most consistently successful advice that I have ever received is to never ride too high or get too low but stay centered. I constantly remind myself of this when we are managing our portfolios. The trust that is placed in us to investment money is deeply respected and it requires that we be mindful of our actions at all times. Whenever we are rewarded with good returns or challenged with corrections, we know that it is temporary, and cyclical and we need to stay focused on what is ahead.

At the end of the book, Catch-22, Yossarian, the main character is shown the way out of his dilemma. He doesn’t have to compromise on his principles and a pathway opens up for his future to have potential. That’s always been the case with the markets, so we know we just have to wait for this catch to resolve itself.

Please reach out to us with any questions about your specific investing situation.

Some essential investment rules:

1. Allocate your money to risk/non-risk assets based on when you plan on using it

a. Keep any money that you need to use within 1 year in a cash position (checking, savings, money market).

b. For money that you need to use from 1 – 5 years use less volatile assets like bonds.

c. For money that you need to use beyond 5 years use stocks and other risk assets (real estate investments, private equity, crypto, etc.)

2. Diversify within your asset categories

a. Think about this: You can’t lose all your money to a bubble if you don’t put all your money in one place. Sectors, industries, countries and companies are all exposed to different types of risk so it is important to lessen risk with diversification.

3. Rebalance

a. Rebalancing is the process of keeping your allocation percentages appropriate. When your investments drift beyond the target allocation, you should rebalance. This creates a buy-low, sell-high process.

4. Dollar-cost average

a. It impossible to know when to buy or sell at the exact right time. I recommend periodically investing to take advantage of the fluctuating market prices.

Centered Financial, LLC is a registered investment adviser offering advisory services in the State of California, Utah, Texas and in other jurisdictions where exempted. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques, strategies, or investments discussed are suitable for all investors or will yield positive outcomes. To determine which strategies or investment(s) may be appropriate for you, consult your financial adviser prior to investing. Any discussion of strategies related to tax or legal planning is general and is not intended as tax or legal advice. Please consult appropriate tax and legal professionals for recommendations pertaining to your specific situation.

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