As always, I want to thank you all for being such great clients and friends. Let me also thank you in helping pursue your financial security and with your hard-earned money. Many of you have trusted me with new investments this year and many have helped me and their friends and loved ones by providing referrals. For that vote of confidence, a special thank you.
Investing in 2022 has not been very friendly to investors. All major equity indexes are down over 15% As of Sept 15, 2022. Bonds have lost money all year and continue to as rates go higher. Gold, silver, and metals are down. The only sector that has had gains is energy and that has changed recently as well as the price of oil has come down from highs. As I said in my previous newsletter, we have seen a dramatic change of leadership in the markets since the recovery from the pandemic lows of March 2020. When inflation and interest rates were low Growth Stocks were the leaders and we took advantage of this opportunity. Growth has been the loss leader as inflation and interest rates have risen to mutli-year highs since February 2021. This has especially exacerbated a selloff in growth stocks and especially smaller cap growth stocks. Moving from 100% growth to a more balanced portfolio has been my goal for 2022.
The Russian war exacerbated these moves in energy and the Covid lockdowns in China slowed supply chains both increasing inflation. These 2 events and Covid related labor issues in the US have caused inflation to last longer than the Fed anticipated. Lower income consumers are getting hurt by inflation as rent, food and energy (although gas has come down) prices remain stubbornly high and the Fed and government are concerned. As the Fed does as much as they can do change inflation by cutting demand for goods and services through raising interest rates, the stock market will continue to fall. There have been a few “bear market bounces” as investors find hopes that the Fed will not have to raise rates for longer, but the Aug CPI report was high, and those hopes have faded. Now the Fed has no choice but to raise rates for some time more.
Since March of 2022, I have rebalanced all portfolios to be more balanced and not just growth. Value, commodities, and energy are as much a part of the portfolios as growth now. In addition, over 35% of portfolios are hedged or outside of the stock market as of the writing of this letter Sept 14, 2022. There have been some false rallies that I have tried to take advantage of, but I do not believe that we are past all the issues in the economy and am more worried about not losing my clients money more than adding to risk. I have considered the market and economics of the US and world and have implemented several strategies that have both short term and long term opportunities that should provide growth and income even in a bad market.
Thank you very much.
Jordan Kerner
Past performance is no guarantee of future results. Investing involves risk and the potential to lose principal.
The information provided, including references to market sectors are for general informational and educational purposes only. No comments referenced herein should be construed as a recommendation of any kind or investment advice. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed. Actual results could differ materially from those anticipated. Please consult your financial advisor before making financial decisions.