Market Commentary Q4 2022

With the 4th quarter of 2022, we have seen a little recovery. If you were closely watching your portfolio, you may have noticed that dividend and mid-cap stocks generated a surplus over their assigned asset allocation in many portfolios. Sectors that distinguished themselves included Health Sciences and Utilities. 

Real estate fund came off its highest highs as interest rates increased. If one must pay more to borrow money, the price must come down to compensate. Since the cost of shelter is a major part of the consumer price index, shelter costs coming down may be a step in the right direction.

Just remember that everything has a cycle. What was down is now up and what was up in the past may be down, but if you have a disciplined, well-diversified portfolio, you are always buying a little bit of everything with your dividends even if you are not actively contributing. When we follow our disciplined approach, we are prepared to benefit from the upswing whenever that happens. When will that upswing happen?  No one can predict.

Wall Street keeps predicting a recession, but every quarter of 2022 proved them wrong by producing consistent and considerable growth in nearly every sector except real estate.

Growth companies, many of them technology-oriented, have taken the brunt of the bear market price discounts. This has led to layoffs at many technology companies, but those workers are some of the most employable people in the country. A couple of the Investment banks on Wall Street have also cut bonuses and laid off junior associates, but once again, Goldman Sachs alumni are likely to land jobs elsewhere pretty soon. 

Citigroup has slashed jobs in their mortgage lending division because home sales are cooling as interest rates rise. Chances are these people will also be well positioned to step into roles at other employers. We still have employers who are trying to re-staff after the Pandemic, so if we do have a recession, it may be a very different situation than in the past. Let’s hope it is all price cuts with little unemployment.


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