Waiting for the Win

In our 2021 year-end recap, we discussed several issues facing the markets that could prove problematic this year.

• Reduced levels of fiscal and monetary stimulus.

• Rising inflation and the Federal Reserve’s need to raise interest rates.

• Declining corporate profits.

• Political election concerns.

The Russia-Ukraine crisis has added another level of uncertainty for investors to absorb.

As expected, the markets have reacted poorly to these ongoing concerns. Indeed, many of the stock market averages have declined by 10-20% YTD with many individual stocks suffering 30-50% declines from their recent highs.

Going into 2022, our team had planned for a more defensive portfolio strategy for our clients by raising cash to cushion the impact of declining markets and to provide clients with substantial funds to invest at cheaper prices. Additionally, we took profits in many of the high growth names and re-positioned the proceeds into blue-chip companies paying good dividends.

This has proven to be a judicious tactic. Our client portfolios are enjoying low risk exposure while the markets digest the multiple fronts…In the meantime, investors should remain patient and recognize that the 7-8% average annual stock returns earned over time includes enduring short periods of “paper” losses while markets stabilize and then, once again, move higher.

The crises will end, the Fed will eventually get monetary policy right, and the underlying strength of the U.S. economy will win the day for investors.