Perspective
Dear Clients and Friends,
It has been a while since we have sent out a communication on market conditions and the economy outside of our quarterly newsletters. With all of the noise in the markets today, both on the stock and bond side, we figured this was a timely communication. Headlines are filled with news of the Ukraine-Russia war, inflation, interest rates, stock market fluctuations, and yes, even the bond market is making the news these days.
While we do acknowledge that we have seen volatility lately, we feel it may be helpful to put this volatility and the recent declines in perspective. 2020 and 2021 delivered to us record stock market returns. Even with the declines we have seen in the stock markets year to date, we are still well ahead of where values were at the beginning of 2020.
When we do see stock market declines, we usually look to the bond portion of our portfolio to help stabilize our account value. Currently, we find ourselves in a situation where bonds have seen declines in value as well. This is due to the increases we have seen in interest rates, as bond prices and interest rates move inversely from one another. (Stay tuned for more on inflation in the May edition of The Advanced Connection). However, this doesn’t mean that bonds aren’t doing their job, they are still fulfilling an important part of an overall balanced account strategy. As interest rates increase, we will eventually see those raises pass through in the amount of income that bonds are paying out to their holders.
We are nowhere near the stock market declines that we saw in March of 2009 or March of 2020, but we understand that it can be hard to look at your accounts. We encourage you to keep in mind that we are invested for the long term, and we developed your investment strategy to withstand this fluctuation that we are seeing. While it can be difficult to look past the noise in the short term, changing a strategy because of what we think may happen or what we fear may happen is generally not in any investor’s best interest. We have worked with you to build all weather portfolios that can tolerate fluctuation, and so we encourage you to stick with the strategy in place.
As always, if you have questions on your accounts or financial life, please reach out, as we would welcome the opportunity to speak with you!
Best Wishes,
Traci Nelson, CFP®, AIF®
Lead Advisor