By no measure was 2022 a good year for investors. Looking into 2023, there are three issues that will impact the market: The Fed and Interest Rates, Ukraine/Russia/Energy, China/Supply Chains.
If you’ve ever planted and cared for trees, particularly fruit trees, you know that, in the initial years, the saplings require quite a bit of extra attention. Newly planted trees need lots of water until established, along with fertilizer and prudent trimming. Initially, trimming branches may weaken the tree, but it's important for the tree's long-term health. I view market corrections in the same light. Without periodic setbacks such as a correction or bear market, we would always be teetering on the edge of a bubble. Most of you who were investing in the early 2000s and during the 2008 financial crisis know when a bubble bursts, it is far more painful than an average correction.
When someone says “The Stock Market,” often the images that come to mind are screaming traders in blue jackets or a large mahogany desk perched atop the glass and steel of Wall Street’s skyscrapers. While everyone has a different image of the stock market, when gauging how well the market is doing, most investors think of the same two or three market indexes. The problem with using these popular indexes as the comparison is that investors are often much more diversified and conservative than these “benchmarks.”
With two tough quarters, we are not sure what the third quarter will look like. However, we know there are three questions on everyone's mind: 1. Are we in a recession? (If not now, is one coming?) 2. When will inflation (specifically gas prices) come down? 3. How long will this market last?...
We are facing a bump in the road right now, and I can feel anxiety and panic coming from some clients. I’m writing this today to hopefully relieve some of those emotions and explain what has happened in markets, why it has happened, and what FSG is doing. In addition, this past Monday, the 9th, Mark Carter and I recorded a video talking about many of the same things.
We are living in a period of great uncertainty, economically and socially. The world is faced with a geopolitical and humanitarian crisis in Eastern Europe. The effects of the Russian invasion of Ukraine are beginning to reverberate through the world economy in the form of rising oil, natural gas, and commodity prices.
Well, this past quarter was not in the 2022 roadmap! In last quarter’s market update, I outlined three potential market villains for the year: 1. A Covid Return 2. Inflation 3. Rising Interest Rates. Little did I know, a real world Bond Villain (Putin) would be the catalyst for most of the market's headwinds this year. Frankly, that is the way these things go: THE UNKNOWN IS ALWAYS THE PROBLEM. The market and its participants were just as aware of the three headline risks I assessed and, therefore, those risks were already priced into the market.
Before I get into the nuts and bolts of what is happening and how we as a firm view the market impact, I want to address this question: Should you be concerned? The answer to this question is the same for every market crash. You should be concerned ONLY if you are relying on your portfolio for income AND there is NO fixed income allocation in your portfolio. Allow me to explain, but first we must agree on the premises that you are investing for the long term, the market cannot be timed, and fear is the enemy of successful investing.