“Nowhere to run to, baby, nowhere to hide” lyrics from the 1965 hit by Martha and the Vandalias is the best way to summarize the performance of the financial markets in 2022. Stocks and bonds both pointed the same direction, down, offering no place to hide from falling values. With Russia invading the Ukraine, inflation jumping and the Federal Reserve raising rates substantially, labor market challenges and supply chain issues there was not a lot to be excited about. It was the worst calendar year the S&P 500 has logged since 2008, falling over 19%. US Bonds, as measured by the Barclay’s US Bond Index logged a loss of over 13% representing their worst year since the index began in 1976.
In 2008 the S&P fell by 38.49%, closing the year at 903.25. The S&P 500 closed with a loss of 19.44% in 2022 at 3839.50. Since that end of 2008 through the end of 2022 the S&P 500 is up 325.08%. I am telling you all of these numbers because it is important in times when the markets are down to zoom back out for perspective. Your financial lives are much longer than any one quarter and looking back it has been best to stay the course even in times of such uncertainty like the end of 2008. We know it is very uncomfortable to see your investments lose value and I also know that keeping a long-term approach is far superior to any attempt to time the markets. The wealthiest families in the world do not think of money in terms of this year or even this decade.
On the Personal Side:
The holidays were special. The economist in me sees a correlation with gifts getting smaller in size as ages and the price of those gifts rise. There is also a correlation between the girls getting older and the girls not wanting to be mentioned in their dad’s silly newsletter.
As Lila enters her last semester of middle school and Amelia enters her last semester of elementary school, I am left feeling old. I cherish times I get to shuttle them to and from dance and other engagements as the brief times to connect. They are both doing great and growing into incredible young women, more thanks to their mother than me of course.
On the Business Side:
This year we will be rebranding as TMRW Wealth. Seeing that the organization will last much longer than myself, it was time to move forward with the rebrand. In some instances we work with four generations of families and our business plan has expanded to a much longer time horizon than when we started. Short for tomorrow, TMRW Wealth best describes our goal every day of creating a better tomorrow for the families we serve.
Feedback is valuable to us and we listen and take it seriously. We currently have relationships with both Pershing and Cetera, and many of you have received mail from both companies. To simplify things and save some trees, we will be consolidating everything under the Cetera umbrella. We will be making these adjustments as we do our annual reviews with you and we wanted to go ahead and let you know ahead of time.
If you need anything at all, we ask you call the office directly at 336-540-9700 or email us at [email protected]. Now you can also text our dedicated text if that is a more convenient way to communicate. To text us, please send a message to 336-860-7646.
Social Media:
We want to connect with you more via social media. Let’s connect on LinkedIn, follow my channel on YouTube or follow my page on Facebook. We will be posting regularly on our blog as well, so be sure to check it out for personal financial advice, market insights and more.
Introductions:
We are here to help. With all the uncertainty in the financial world we feel that this is the time we can be of most assistance. We are here to help whether it be assisting with the settling of an estate, creating a strategy your family business to lower taxes or planning out wealth across multiple generations we have the team and experience to help. Please keep us in mind if you feel we can help your friends or family.
Online Access:
Here is a link to your online portal, click here.
The Bus:
The office had a blast picking apples last quarter. If you are on the board of a non profit or contributing to a charity fundraiser auction in any way, please don’t be hesitant about reaching out. The whole point of the bus in the first place was to raise money for local non profits and causes that help to make this community so special. You can email [email protected] or visit www.whythebus.com.
First Quarter Outlook:
As we enter 2023 and the self imposed noose the federal reserve has placed around the neck of the economy there are some real fears. Will real estate freeze instead of cool? Will the strong labor market that currently measures 2 openings for every candidate slow? Will demand continue to stay strong? When will the Federal Reserve stop raising interest rates and will they begin to pull rates back once inflation is securely in check? You do not have to worry about any of those questions. We are on it for you. Our goal is to stay diversified and stay the course.
With the aforementioned fears, we see a lot of opportunities. First, bonds are an asset class that has offered terrible returns over the past years. While it may be a horrible impact on mortgages and the real estate markets, investing in bonds offers returns now that have not been seen in some time. Companies have much lower and more reasonable outlooks than what happened after the low rates and stimulus used in response to COVID in 2020. These lower expectations have come with lower valuations and some opportunities. In our view the best thing that we could see in the global economy would be Russia pulling troops out of the Ukraine, a pivot by the Federal Reserve as inflation cools to acceptable levels and supply chain stabilization as China abandons its dark age lockdown approach to battling COVID.
Planning tomorrow today.
With gratitude,
Matt Logan
Disclosures: The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Barclays Capital U.S. Aggregate Bond Index, which used to be called the “Lehman Aggregate Bond Index,” is a broad base index, maintained by Barclays Capital, and is often used to represent investment grade bonds being traded in the U.S. Barclays Capital (BarCap) U.S. Aggregate Bond Index is made up of the Barclays Capital U.S. Government/Corporate Bond Index, Mortgage-Backed Securities Index, and Asset-Based Securities Index, including securities that are of investment grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $100 million.
