It has unquestionably been a rough road for 2022. I, of course, do not want to make light of the concern most of you undoubtedly have with your portfolio, but I'd like to provide you with information I have been gathering from some of the leading money managers in the industry.
Here is some of what I am hearing …
“Financial Markets have demonstrated a remarkable ability to anticipate a better tomorrow even when today’s news feels so bad.”
~ Martin Romo, President of Capital Research Company, 2020
Obviously I cannot make any guarantees and past performance does not guarantee future results but when we look at historical data, the markets have always rebounded. And remember to keep in mind that we invest for the long term. Although we have not faced this exact market or economic environment before, we have faced many challenges over the years, here is a chart from American Funds to help us keep things in perspective.
Focus on Quality and Positivity
I was recently on a call with my American Funds representative and he brought some of their thoughts as an organization to my attention. Many of you have investments with American Funds/Capital Group so I thought this might be insightful. There are three major points to consider in the current state of the markets:
1. There are signs of growth.
In a recent article by City National Rochdale they state,
“US Fundamentals, especially those for households are still broad and powerful and should provide some cushioning against rising headwinds.”
2. Corporate earnings will drive the markets, the focus should be on quality companies.
According to American Funds Noriko Chen, he states, “On the positive side, corporate balance sheets are much better this time around and are in generally good shape, and we're seeing market valuations adjust to the reality of lower growth.”
City National Rochdale also stated they are “focusing on holding high-quality, reasonable valued US companies with strong management teams that can weather a recession. “
3. We will most likely see a “healthy recession.” Which they believe will “flush out” the excess of the last decade and reset stock prices.
And What about Bonds…?
Yes it is no surprise that with rising interest rates and the current market environment bonds have struggled. However, now might be the time to look back to investing in fixed income; there are many who think that bonds have felt the pain of downturn. “Income is returning to the fixed income market.”
So all this being said I know this a difficult time, but remember we have built out your investment portfolio in anticipation of these market corrections and have worked to align it with your individual goals, investment objectives, and risk tolerance. As always if you have any questions, I am here to help! CLICK HERE to make an appointment.