Inflation is up, interest rates are up, property prices cooling and stockmarket is down - fun times!

None in the title above are a surprise, and all were expected months ago. What hasn't hit yet is an official recession, but I think that will come maybe late 2022 or early 2023.

A number of days ago, the new Australian Treasurer stated that we should expect to hit a 7% inflation rate and that it will last 2 years.

Now, really.... have you ever known a politician actually tell the truth when it came to any news? When it comes to bad news, I believe they always understate it by a lot.

So, I'm thinking we are looking to hit 10-12% and it will last 3-4 years (or more). However, all we can do is take an intelligent guess based on what is happeing now and how stuff panned out in the past. Don't you agree?

Having said that...... here is another thing to consider with regard the current stock market situation. If we look at just the Australian All Ordinary Shares Index (All Ords):

1. When the GFC hit in 2007, the index dropped ~50% over a 17 month period.

2. In 2020 The index dropped ~33% in about 45 days.

Whatever is happening now, the All Ords has dropped ~16% from it's high in Jan 2022 until now. Taking the above two points of fact of previous market behaviour, where do you think we are headed, and over what period of time?

Personally, and this is only my opinion, I think 16% is far from the end point. I think the "fixes" that the central banks are trying to put into place will take time to implement and take effect, hence I think more pain for a much longer period.

I think this is more like the GFC rather than teh COVID scenario.

I have picked my rough target numbers and timeframe, but I'm not an advisor, and my numbers are just my hunches and are not set in stone. They will depend on what happens in the coming months with regard government and central bank decisions/policies.

1. This is when knowing financial history and past economic events is important, as history repeats itself.

2. This is where financial education is important, how else will you make good decisions?.

3. This is where understanding investor psychology is important, don't follow the masses, instead, set the trends.

4. This is where being cashed up is important, because when assets are on sale, cash is "king".

Do you now better understand the importance of the above things?

History really does repeat itself.

People's nature and investing psychology does not change.

So, if one studies and knows financial history, understands how one thing can affect another, knows not to believe the government numbers on inflation or employment, is skeptical of everything and instead does their OWN due diligence on their OWN data and observations, then that person has a much better chance at wealth creation than the mass of lemmings following the media hype and listening to so-called experts, guru's and "influencers".