Q1 Newsletter Highlights + Insights

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“To say this occurrence is uncommon would be a big understatement.” 

While this observation from our most recent Financial Sense newsletter could refer to any number of odd and / or historic things going on with our economy at the moment, it was specifically referring to the fact that 2022 was just the third time in U.S. history that both stocks and bonds were both down in the same year. Even more uncommon is the fact that 2022 was the first year ever that both were down more than 10 percent in the same year!

The prolonged downturn in stocks was due to a number of factors, with the impact inflation continued to have on consumer spending a primary one. In turn, the Fed’s battle against inflation through sustained short-term rate hikes helped lead the drop in bond prices. As we share in the newsletter, this historic confluence reflects the plenty of negative data and sentiment we are seeing across many sectors of the economy.

So where do we go from here? The good news is that, despite the negative headwinds, there are increasing reasons to be optimistic about the economy in the intermediate term. This includes the important historical fact that the market is a leading economic indicator, typically telling us what the economy will be doing 5-9 months from now. In 8 out of 9 past recessions dating back to 1960, for example, the market began to rise well before the recession was over.

In addition, forward-looking return projections for a diversified portfolio have improved. Fixed income should contribute to returns over the next few years, while equities will continue to offer the best hedge against inflation.

Our objective, Fee-Only approach means we can design our portfolios to have an asset allocation strategy that provides optimal diversification and performance without any bias toward particular products or funds. Like almost any portfolio, our types of diversified portfolios can decline in value over a short-term horizon. By keeping a long-term perspective and ignoring short-term volatility, however, the probability of achieving our desired returns significantly increases. As we always say: “Time in the Market is more important than Timing the Market.”

You can read all of our thoughts about the market in our latest newsletter here. And if you’re interested in learning more about how our Fee-Only approach can help you reach your financial goals, get in touch


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