Second Quarter, 2022

“NOWHERE TO RUN, NOWHERE TO HIDE”

Martha & the Vandellas in their 1965 hit song perfectly described how investors felt when the first half of 2022 was over. There was “Nowhere to run, nowhere to hide.” 

Of the 40 investment categories reported by the Wall Street Journal*, 29 had losses ranging from (59.6%) for Bitcoin to (0.3%) for Sugar, and only 11 had gains ranging from +3.3% for coffee to +63.8% for gasoline.  Broad stock indices were down from (29.5%) to (15.3%), and even broad bond indices felt the pain of rising interest rates and escalating inflation with losses ranging from (17%) to (3.2%).

*  “It Can Always Get Worse” July 2-3, 2022 returns year-to-date as of 6/30/22.

So, statistically, you might ask, “What can come next after such a first half sell-off?”*

– As measured by S&P500, this was the largest first half sell-off in more than 50 years.

– In the two years in which S&P500 exceeded this year’s sell-off, the index rebounded in the second half, rising +15% in 1962 and +27% in 1970.

– In 4 of 7 years with declines of 10% or more since 1960, losses worsened in the second half.

*  “The Selloff, and What Comes After” Wall Street Journal, July 2-3, 2022

And what can we do while we wait for recovery?

– Tax trades in 2022 — selling stock and bond fund positions to realize losses for tax purposes and reinvesting proceeds into similar funds and holding for at least 30 days.

– Rebalancing back down to equity goal prior to downturn — In 2021, while equity markets were still up, many accounts were rebalanced to realize gains prior to the downturn.

– Count your wealth in more ways than dollars and cents — hug your loved ones.  Connect with friends.  Pat yourself on the back. Enjoy your vacation and leave the worry to us.

– Phyllis

Author: Senior Vice President Senior Wealth StrategistPhyllis had been associated with W&A for a number of years before joining the firm, acting as a consultant to the company in its formative stage and subsequently as a client. Prior to joining W&A, Phyllis served as Vice President, Corporate Finance at Morgan Keegan & Company, Inc. She was involved in all aspects of its investment banking activities, including mergers and acquisitions, valuation studies, and initial public offerings. She earned registrations in NASD Series 7 (Registered Representative) and Series 63 (Blue Sky). Phyllis holds an MBA in Finance as well as M.Ed and BBA degrees from the University of Memphis. She is a Chartered Financial AnalystTM(CFA®) and a Certified Financial PlannerTM(CFP®) Licensee. She is past-Chairman and past-President of the Mid-South Society of the Financial Planning Association (FPA) and served on their Board of Directors from 1995 to 2000. During her term as President in 1998, the Mid- South Society of FPA was chosen the Outstanding Society of the Year by the national FPA organization. Her community volunteer activities include MIFA and the Women’s Foundation for a Greater Memphis, where she served as Treasurer, Chair of the Finance Committee and currently chairs the Investment Committee. She also serves on the Board of Governors of The Seaside Institute in Seaside, FL.

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