The waters have been getting noticeably rougher for equity markets in the beginning of 2022. Central banks are forced to react to inflationary pressures by rising interest rates and tightening liquidity conditions. Stocks, bonds, and other assets react fearfully to a change of uncertain magnitude in monetary policy.

After almost two years of a rally with below-average volatility a correction of 10% to 20% is entirely normal. In case stocks continue to move down, we may see a signal for a gradual reduction of risk in our portfolios over the coming weeks.

We will likely have to endure choppy waters for some time to come during the first quarter of 2022, before stocks recover to new highs.