Q1 2022 Market Review
Stock markets around the globe were rattled in the first quarter of the year as tensions escalated between Russia and Ukraine, and while the Federal Reserve began to raise interest rates to combat rising inflation. Supply chains globally were disrupted by COVID-19 lockdowns and by some countries deciding to cut off supply of products from Russia and Russian companies. On the prospect of the Federal Reserve raising interest rates at subsequent meetings in 2022, even bond returns were starkly negative.
Taking a Step Back
While the world remains hyper-focused on the geopolitical instability in Europe, it is important to look at the bigger picture. For more than a decade following the Great Financial Crisis in 2008, the major economies of the world were dealing with the issues of low growth, low inflation, and low interest rates. Central banks, to no avail, worked to stimulate their economies by buying bonds, effectively holding interest rates down, and in turn, drove investors into stocks to chase returns. Rather than prioritizing real investment in projects, large companies chose to repurchase their own stock at unprecedented rates to boost their stock prices.
Fast-forward to 2022, and the environment is rapidly changing. While it is too early to call, there are signs that the Federal Reserve will continue aggressively raising benchmark interest rates this year, high inflation readings show no signs of slowing down, and there could be a recession on the horizon.
We think clients should be positioning their portfolios for the next investment environment rather than focus on what did well in the previous one. That means allocating to strategies that tend to hold up better in periods of higher inflation and higher interest rates, as well as diversifying portfolios outside of the U.S. markets as isolated geopolitical events cause market correlations to fall.
Whatever comes next, the most important thing to focus on is what you can control. Set realistic goals, save and invest for the future, and let’s work together to make sure you are executing on your financial plan. If you find yourself feeling anxious about current events, bear in mind that uncertainty creates opportunity for the long-term investor.
With you for the long haul,
Carter Ellis, CFP®
Founder
Disclosures:
Past performance is no guarantee of future success. This material is for informational use only and should not be considered investment advice.
The opinions expressed are those of Guardian Wealth Advisors, LLC. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward looking statements cannot be guaranteed. Investing involves risk. Principal loss is possible.
Investment advisory services offered though Guardian Wealth Advisors, LLC D/B/A Valley Peak Financial. Guardian Wealth Advisors, LLC ("GWA") is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about GWA's investment advisory services can be found in its Form ADV Part 2, which is available upon request. GWA-22-35
