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Blakely Financial 2022 Market Commentary

2022 Market Commentary

Much of this year’s market volatility is attributed to uncertain federal reserve policies, especially with respect to the terminal rate, which represents the forecasted level at which hikes will stop. The terminal rate changes consistently in response to new information. 

Interest Rates

The Federal Reserve is committed to lowering inflation before it can pause rate hikes. They have been raising interest rates by .75 percentage points and did so for the 6th consecutive time in November. Federal Reserve Chairman Jerome Powell recently stated that these increases will continue, but at a lower frequency: “Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” he added. “The time for moderating the pace of rate increases may come as soon as the December meeting.”

Housing 

After a chaotic couple of years for the housing market, 2022 brought a decline in existing home sales, which has begun to bring average home sale prices down with it. This is connected to the high-interest rates discussed earlier, as we see mortgage rates north of 7%. Though there is no way to be completely certain, it seems as if these rates will continue to inch up over the coming months until inflation has returned to more comfortable rates. Though this is not good news for first-time homebuyers, hopefully, it will indicate a gradual return to normalcy and give the housing market a chance to balance out.

Economy

Even though the housing sector has slowed down, overall economic growth seems generally on track as spending activity has remained resilient. The third-quarter GDP estimates showed growth at a rate of 2.6%, slightly better than predicted earlier. Consumer spending indicates a stabilization in demand and goes along with healthy rates of employment. 

Continuing Risks

Hopefully, the improvements we have observed in fundamental sectors indicate long-term growth. In the meantime, several risks remain abroad, such as the slowdown in China, the crisis in Ukraine, and the tightening of global monetary policy. How these may impact U.S. markets and our economy remains to be seen, but we should be prepared regardless for continued volatility as we begin 2023. 

Looking Towards the Future

Throughout history, stocks fall as inflation reaches a peak, and rebound strongly once inflation starts to come down. Volatility is the price of admission for long-term investment games, which rewards the patient investor.  

Here at Blakely Financial, we constantly monitor the economy, the markets, and your portfolios to assess how our chosen investments are performing and decide if changes are necessary or prudent. Overall, we have observed multiple Indications of reduced inflationary pressure in the months ahead, which could be good for stocks. We remain confident in our medium and long-term strategies, regardless of what the immediate future may bring. 

 

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Blakely Financial Investment Committee Updates

2022 Investment Committee Updates

As 2022 comes to a close, it is helpful to look back on the changes we have made to keep up with the market to help you continue on the path toward your financial goals. We hope this information gives you more insight into our investing philosophies and strategies, so you can be confident in your choice to work with Blakely Financial. 

What has the Investment Committee been doing to keep up with the volatile market?

Here at Blakely Financial, we base our decisions on the long-term future of your investments combined with your overall goals. Though it can be difficult to navigate a bear market, rational thinking and patience are the best ways to ensure the success of your investments over time. There were a number of changes this year but none of them would be considered radical adjustments or departures from our long-term investment objectives; the overall allocations of stocks to bonds remains largely the same and we don’t recommend any changes in that area. It’s very possible that the drawdown in the first half – and the ongoing choppiness today – is the market pricing in this economic weakness. By the time a recession arrives, if it ever does, the market may have already moved on.

How does the Investment Committee stay up-to-date on market trends?

We constantly monitor the economy, the markets, and your portfolios to assess how our chosen investments are performing, and decide if changes are necessary or prudent. These efforts constitute a significant part of our everyday work. We keep a close eye on even the slightest changes in trends so that you don’t have to! Though we do not use market timing as a strategy, we use all of the information we gather on a daily basis to inform any portfolio adjustments. 

What are some examples of portfolio adjustments? 

We recently executed a number of trades in early August, here is a high-level summary of those changes:

  • Decreased international developed exposure
  • Increased U.S. exposure in Large-Cap Growth and Value
  • Increased U.S. exposure in Mid-Cap Value
  • Marginally increased duration positioning
  • Adjusted credit exposure
  • Systematic Multi-Strategy fund replaced some fixed income.
  • Proportionately reduced all fixed-income funds; using alternative and multi-strategy funds as complement/substitute for fixed income.

 

Though nobody can predict for certain what 2023 has in store for us, here at Blakely Financial we are confident in the future of your investments, and the decisions we have made in the past year. 

 

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.