Client Newsletter Q2 2022
Dear friends,
We often begin this letter recapping the national news, and unfortunately the tragedy that took place at the Highland Park parade on July 4th hit close to home. Many of our clients and teammates live or have a personal connection to Highland Park. Our hearts go out to the victims, their families, and all who live in the community.
The first 6 months of the year have not been kind to the markets. The S&P 500 was down over 20% and the tech heavy NASDAQ declined 30%. Our portfolios held up well in comparison to the overall market, however, it never feels good to see negative returns on your year-to-date report.
When the market falls 20% it is technically considered a “bear market”, though to us it resembles more of a Yogi Bear market rather than a big bad grizzly. Many experts say we are marching into a recession, although the data from the first 5 months of the year tells a different story. Manufacturing production is up more over 6%, unemployment rate has dropped, and payrolls are up. Consumer spending and income were at record highs. If this is a recession, then the numbers paint a picture of an economy in decent shape.
A perfect storm of economic conditions has caused the market to drop. The Fed has been raising interest rates at a faster pace than they initially stated. The war in Ukraine is causing oil and agricultural prices to trade at a premium, causing strain in developing countries around the world. We anticipate continued turmoil around the globe, but the U.S. and developed world should be able to manage. In fact, we are beginning to see energy prices come back to earth and predict food prices to follow.
We may not know how long it will take, but we expect the economy to adapt to the higher costs of wages, debt, and prices. We have seen this play out many times throughout history. That’s why we are sticking with what has brought us here and staying the course. If you look at the chart below, imagine all the times over the past decade one could have sold in a panic, only to miss the rally that ultimately followed.
Since the beginning of my career, I made a commitment to buy stocks and ETFs for my clients that I buy for my own portfolio. Our holdings consist of companies with strong balance sheets and dividend payouts. Amongst all the volatility, remember your portfolios are set up for the long haul.
Our lives are constantly evolving – let’s set up time to review your cash flow and investment objectives. If you are nearing retirement, want to review an external account, or have anything else on your mind, please reach out.
I hope you are enjoying your summer and I look forward to connecting with you.
Best,
Investment Advisory services offered through Moonstone Asset Management, Inc. a registered investment adviser
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.