Client Newsletter Q4 2022
Dear friends,
I hope you all had a wonderful holiday season and enjoyed time with family and friends. Reflecting on 2022, the headlines reminded us it was not the best year. Markets were down, Russia started a war, energy prices skyrocketed, and Queen Elizabeth passed away. However, as many of us know, headlines aren’t the only determinant of a good or bad year. It’s natural to take inventory of events that occurred in our own lives before deciding if the year was good or bad. As I approach my 60th birthday, I realize that despite soldiering through some challenges (I like to call them character builders) most years have been net-positive and fortunately this is the case for most of our clients.
For three straight years the market was on a red-hot winning streak that ended in 2022. Bonds, typically inversely correlated to stocks, lost value too. Unless 100% of your portfolio was in energy, everyone lost. Due to high inflation, interest rates increased at a speed we haven’t seen in decades. This caused the twin declines in stocks and bonds and gave the S&P 500 its worst year since 2008. Fortunately, our portfolios fared better than the broad market due to our sector diversification.
In the months ahead we expect continued volatility as businesses adjust to the new post-covid environment. There is talk of a recession in our future, and we are beginning to see major job cuts at larger companies following the holiday season. But the economy is not the stock market, and typically the stock market leads the economy. We expect the equity markets around the globe to have a good year following last year’s disappointment. Inflation in many sectors like oil and gas, home prices, and used cars is abating and interest rates are beginning to drop. As the economy changes, so does our investment focus. We are seeing strong opportunities in energy, financials, and precious metals in the years ahead. We will be favoring these sectors as new money comes into our portfolios.
Moonstone was founded in 2006, which was quickly followed by the worst financial crisis of our lives. Staying true to our investment philosophy, we weathered the troubles and saw a tremendous rebound. We’ve stayed true as people lost their heads in 2018 and again during COVID in 2020. Sitting tight with high-quality companies historically has outperformed trying to time the market; getting out as losses mount only to buy back in at the top.
What we do best at Moonstone is truly understand your financial situation. Our portfolios are crafted with a full perspective of your financial health — from current income to retirement plans and all major life events in between. Once that’s done, we stay the course while monitoring for potential changes in the markets and in your life. Investing for the long run takes an extraordinary amount of discipline, but that’s where we shine.
Warm regards,
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.