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For the financial markets, 2022 was a good year to put in the rearview mirror, as both stocks and bonds faced a very difficult environment. In fact, according to a recent Wall Street Journal article by Jason Zweig (Jan 7-8, 2023): “In 2022, a 60/40 portfolio (stocks/bonds) had one of their worst years in history.” Quoting data from T. Rowe Price Group, Zweig further notes: “the typical 60/40 portfolio’s extreme losses last year had a probability of occurring only once in every 130 years.”

As we’ve always said, Wall Street wants us to panic about something. That way we transact more, buy more “guaranteed” products (chock full of commissions!) and take high-priced stakes in hedge funds or other private investments! Today’s panic of the moment is the widely predicted oncoming recession. Of course, most of these predictions for a recession were made for 2022. But as these turned out to be premature, calls now are for 2023. And if that doesn’t work out, there’s always 2024. Make no mistake: yes, a recession will ultimately come. But it is equally true that when that time comes, nobody is going to ring a bell and say “ok get out of the market now” and then ring it again signaling to get back in when the market is at the bottom.

“Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.” – Ben Graham, author of “The Intelligent Investor” While the trend this year has clearly been negative, markets continue to trade in a wide range over the last several months, essentially moving in step with the daily economic headlines…or, as it may be, comments from the Federal Reserve.

This summer has proved to be a dizzying time for investors as the markets have witnessed truly rollercoaster-type moves throughout June, July and August. Not surprisingly (…as we have been covering it for the better half of 2022), the issue of most concern for investors still revolves around one major topic: inflation. Of course, it is not just rising prices that have markets worried, but what actions the Fed will take to reduce it and how severe those efforts may be on interest rates, consumer demand and, ultimately, corporate earnings.

As we near the finish to the first half of 2022, the market’s sustained volatility has become widely publicized. Experiencing daily moves--both up and down--of 2%, 3% and even 4% has not been unusual over these last few months. Stocks have entered their latest bear market and bonds have had their worst start to a year since the 1980’s. This increased unpredictability in the market’s direction underscores the issues facing the market and highlights how fluid circumstances can be on a day-to-day basis.

The markets never make it easy. The first quarter was marked by a number of headwinds that investors are still wrestling with today as volatility continues. High-growth stocks have generally been hurt the most, but overall, stocks suffered their worst quarter in two years….and it has been the worst start for the markets since 1939!