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Market Turbulence In 2022 Thumbnail

Market Turbulence In 2022

       The markets have seen a great deal of turbulence so far in 2022, but history provides us positive examples to learn from, and HB Wealth is taking positive actions in response to the rocky first quarter of 2022.

So what’s the response to markets like we have seen so far in 2022?

     In our tactical strategies, we are monitoring various sectors, and will make changes where appropriate. 

     We are also continuing to re-allocate portfolios, where applicable, to additional weights in consumer staples, low volatility holdings, dividend yielding equity strategies, and short duration fixed-income holdings. We have been and will continue to use buffered ETF and annuity strategies to protect the downside, where appropriate.

So where does this volatility come from? 

Many factors have led to this, including:

  • Major government spending on pandemic relief is an inflation contributor,
  • The Fed, in an effort to curtail inflation, has raised rates and is expected to continue to raise rates
    1. This leads to slower economic growth and negative pressure on the stock market.
    2. Additionally, investors are skeptical that the Fed will succeed at this.
  • At the same time, we are experiencing a challenging geo-political environment with
    1. Chinese lockdowns and supply chain disruptions
    2. The Russian invasion of Ukraine has caused commodity and energy prices to increase.
    3. These both have led to more inflation and market uncertainty.
  • During the pandemic big tech companies (like Netflix, Zoom, Amazon) performed very well. Now, coming out of the pandemic, their revenues and stock prices have dropped.
  • Poor leadership and policy decisions from Washington haven't helped either..


What can we learn from the history books?

If history is any guide, these things usually sort themselves out and markets bounce back rather quickly. For example, going back to 1980 there have been 32 average market pullbacks of 10% or more. Those market pullbacks have averaged a 18.55% loss. On average the S&P 500 returned 24.91% after one year and 37.38% over ten years.


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