Crazy market so far in 2022 to say the least- record inflation, Fed raising rates, bonds getting beat up (worst start to a year for bonds EVER), an overseas war, and certain areas like technology being challenged badly on the downside.  With all of that- so I’ve learned over 20 years- comes the opportunity to roll up our sleeves and go to work for our clients.  It is our job to always look for ways to help better position your portfolio and/or your tax situation while things are chaotic.  Here is what our investment committee is working to do over the coming weeks.

1. Bonds- many are calling this the “Great Reset” in the bond market, coming after decades of falling interest rates (all the way to 0) and low inflation, and now shifting to higher inflation and rising rates.  Bonds have struggled this year so far, and this has opened the door for the first time in my 20 year career to consider tax loss harvesting on bonds (where we sell bonds that are down, take the tax loss to help you offset other gains now and in the future, and reposition you).
2. Alternatives- as we evaluate the strategy of tax loss harvesting bonds, and look for funds to move the money to, we are considering adding some more strategic bond and alternative managers to hold some of our fixed income, as we don’t see much opportunity for growth or anywhere close to keeping up with inflation in the bond area.  We will likely never abandon bonds altogether, as they provide liquidity in the event cash in needed, but our research is pointing us adding in more bond alternatives in search of yield and protection against inflation.  We did some of this last year already in preparation for rising rates, but top firms that we have on our investment committee are suggesting doing a “round 2” to add a little more.
3. Technology/Innovation- these stocks have been beat up pretty bad this year, I read a stat that almost 1/3 of the stocks on the Nasdaq were down over 60% (like Netflix being down around 60% just last week!). Fortunately, in a well-diversified portfolio, technology should only be a small piece of the overall allocation. We’re seeing these large adjustments in high growth companies come as the FED tightens their position on the economy. It’s not that these companies have lost their ability to perform in the future, but rather their extreme valuations have come down to more normal levels. For long term investors, could it be time to invest in the high growth sectors that have gotten hit hard? There’s no timing it perfectly, but anytime there’s a 20-30% “sale” in high growth companies, dollar cost averaging can yield positive long term results. Just food for thought if you are in the position with some “dry powder”.

If you have ANY questions, we are here for you, otherwise, use this email to simply know that my entire team is working our tails off during volatile periods like this.  It’s not the first time we’ve seen this volatility, and it won’t be the last if history is any lesson (December 2018, March 2020 with Covid, etc), it is an opportunity we always look for when the market presents it.

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This is not a replacement for the official customer account statements or trade confirmations from Raymond James or other custodians. Investors are reminded to compare the findings in this report to their official customer account statements. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of David Adams and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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Dollar-cost averaging cannot guarantee a profit or protect against a loss, and you should consider your financial ability to continue purchases through periods of low price levels. The companies engaged in the communications and technology industries are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.