- Coming into 2022, equity valuations were extended by historical standards. They are now below long-term averages and represent a tremendous value to long-term investors.
- The velocity of the moves in this market have been very dangerous. Avoid attempts at market timing, aggressively going to cash, and chasing returns. Keep your cool. Successful investors do not allow emotions to impact their investment discipline.
- We expect to see value continue its leadership over growth-oriented companies. Value has historically outperformed growth during rising rate environments which have a greater impact on growth company profit margins.
- We expect the Fed to continue its aggressive stance with raising rates until they start to see some signs of inflation slowing.
- Pay attention to the valuation of your stocks, as it will be very hard to outperform the market with a portfolio full of overvalued companies. Valuations now matter again. That is a good thing!
- We continue to underweight our bond allocation, but are increasingly aware of the benefits bonds provide if we do enter a recession and rates drop.
