Second Quarter 2022 Review

With the Federal Reserve shifting into hawkish monetary policy and fiscal stimulus long gone, stocks have undergone a rapid adjustment to the altered environment.

Repricing in the stock market happened very quickly. U.S. stocks suffered their second worst start to a year in history, with the S&P 500 index declining by -20% and falling into bear market territory. Bonds did not offer much respite in the first half of the year either. The yield on the 10-year U.S. Treasury more than doubled from 1.44% to 2.98% in the first six months, which ultimately meant that a 60% stocks/40% bonds portfolio did not perform much better than an all-equity portfolio.

We think portfolios can be positioned more cautiously in the near-term, while holding on to core equity exposures with a longer-term time horizon. Tactically, we have taken our cash levels higher, while trying to remain tax-efficient for taxable accounts