Stocks and Investing: The sky is falling!...or is it really?

If you've been watching the news and the financial markets for the last several weeks, you may get the impression that the sky is falling. Everyone is screaming "inflation" and "recession" and talking about the Dow Jones Industrial Average falling and what this means for us as consumers.

It's important to put all of this in context. Do we have inflation? Yes, the prices of many goods are rising, and that's due to a whole lot of different factors. The price of oil is one that is mentioned often. But the cost and availability of raw materials is another factor, and one that more relates to the buying habits of consumers. Our buying habits do have an effect on the price of things, as wholesalers and retailers will adjust their pricing according to the demands of consumers.

And then we have the stock market. Yes, the Dow Jones has fallen a good bit, but remember that it is only one measure of the health of companies and the economy. There are other measures like the S&P 500, but no matter the measure, it is often biased because it only includes certain sectors or companies of a certain size.