The year 2022 was not an easy one. International struggles were and remain heartbreaking and, of course, inflation levels are higher than originally anticipated, causing prices to climb.
Navigating the Market
The Federal Reserve Board of Governors, also known as the Fed, has made controlling inflation its primary concern and therefore has implemented a series of expeditious interest rate increases in an effort to slow the economy. The idea is that, if there is a cooling in demand, it would allow the supply chain to catch up, and thus moderate prices to bring down inflation. There is a delicate balance between slowing the economy and avoiding a recession that can be challenging to control. Despite these challenges, employment remains robust outside of the technology sector. You may have noticed that the markets tend to react positively on days when it is suggested that the Fed may slow the rate of interest rate increases.
Investments that worked well in a low interest rate environment (technology & biotechnology stocks, almost all bonds) are struggling with higher interest rates. Making adjustments in portfolios to emphasize or de-emphasize certain assets and sectors has been beneficial. As we work our way through the more difficult part of the economic cycle, we will continue to look for ways to mitigate risk and add value.
If the economy does enter a recession, investors can take advantage of opportunities that only arise during times of difficulty. As long-term investors, I encourage you not to be afraid of volatility. Please know I’m available for you and welcome the discussion.
At the Office
Many of you have had the opportunity to meet or work with Madison Cooper, our Client & Operations Specialist. This past year. Madison has proven to be a great addition and a highly valued part of the team. It has been a wonderful collaboration as we continually focus on how to best serve our clients.
A Focus on You
Our hope is that you will have some downtime over the holidays, giving yourself the ability and time to reflect and plan for the year ahead.
We are profoundly grateful for your trust and the opportunity to listen, share ideas and provide direction as you progress toward your goals.
The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.