2022 - A Depressing First Half

To begin our June market commentary let’s just state the obvious and very honest reality that from an investment perspective June was a horrible month. Just when you thought the markets couldn’t possibly go lower, they did. No matter what asset class or trading vehicle you choose to look at nothing remained unscathed from the carnage. That being said, your June statement is not going to look great. The markets are exhibiting temporary negative valuations  and the key word is ‘temporary’, meaning a moment in time. Not permanent. We know it’s tempting to look at your portfolio value and we know all too well the negative emotions that can and will follow. Especially, considering at the end of 2021 our individual portfolio valuations were more than likely the highest they’ve ever been, depending on where you’re at in your life cycle. So, let’s just face the facts together. The S&P 500 was down another -346.77 points to close at 3,785.38 and the TSX was down -1,867.98 points to close at 18,861.36. In addition, double digit losses in bonds worldwide mark the worst performance in fixed income history. What’s driving this? Didn’t we say the markets would be positive in 2022? Yes, we did predict that and there’s still a good chance this year will finish positive, albeit much lower than our initial forecast.
 
There’s a lot of negative speculation happening due to inflation and interest rates, which of course is being magnified by the Russia/Ukraine conflict and the longer it draws out the more impact it will have on future growth potential. Collectively, the markets are squarely in bear market territory as recession fears prevail, yet corporate earnings are still positive. Is it possible the markets are over done at current levels and a rebound is on the horizon, or will inflation and interest rate hikes persist and as a result we must endure more market downside?

This is the unknown, for which we do not have an answer. Clients tell us “well it’s simple, a recession is inevitable.” Is it though?  We like Brian Belski’s response to this belief recently where he said, “it’s a little too early to wave the all-clear flag, however we do not see conditions present for a recession let alone a bear market.” He went on to say that the stock market has been amazingly resilient and although the belief is that growth will slow heading into 2023, he asserted that “a recession does not happen when everyone is looking for it, but what I do know is that a recession happens when you least expect it. So, when everyone, including their mother, brother, sister, cousin and uncle thinks we’re going to have a recession because of what’s happening in the Ukraine…I’ll take the other side of that bet.”
 
At the end of the day our mentality is “this too shall pass” and for those wondering how they could have dodged this volatility; we suggest you don’t waste another minute on this thought process. Stay the course with high quality companies. Remember, we invest in real companies that you know, understand and for the most part, you can reach out and touch them. In addition U.S. equities represent the most liquid, discernable market in the world because the U.S. boasts both the largest economy and is home to the best companies. Oh, and by the way Canada isn’t too far behind. So, as the markets adjust to the daily, and hourly news, let’s all keep the above statement in mind and focus our attention on living our lives with confidence, not fear.

To receive a full copy of our June 2022 market commentary, please email us