AP Wealth Market Update

AP Wealth Market Update



The 2022 AP Wealth investment committee meetings have been full of hot topics to discuss. The market volatility continues with inflation, interest rate hikes, supply chain issues, high energy prices, and the war in Ukraine weighing on the market. During periods like this, one thing we do well is help clients maintain proper perspective. Below are the key takeaways from our investment committee to help you do that during this downturn.


1.) Media and News – Even when markets are doing well the doom and gloom stories are prevalent because that is what get eyeballs to read them. Financial articles are often focused on negative information impacting very short time periods. Reading lots of doom and gloom articles is not good for your overall health. We encourage clients to stay informed, but we also advise you to maintain a healthy long-term perspective.



2.) AP Wealth’s Long-term Perspective – It is easy to forget where we have been. Ten years ago, the S&P 500 was around 1,300. This week the S&P 500 is around 3,650. That is a 180% return over the last 10 years and we are currently in the middle of a 20% downturn today. A big part of that is the returns we experienced in 2019 (28.88%), 2020 (16.26%), and 2021 (26.89%). That is a 72% return over three years. Even with the downturn, the S&P 500 is up 50% over the last three years for an average annual return of 16%. It is not fun to see account values go down, but over time diversified portfolios do very well.



3.) Stay the Course – Asset allocation is the most important piece to your long-term success. We have had some great conversations with clients over the last few weeks. All our clients’ portfolios have a customized asset allocation based on their goals, time horizon, risk tolerance, and overall financial situation. Please do not hesitate to call us if you get nervous or feel anxious along the way. We are happy to walk you through your individual plan to help you stay the course.



4.) Market Timing – We are not believers in market timing. It is very common for the best market days of the year to follow the worst days. The chart below demonstrates the importance of staying invested.


S&P 500 Returns




5.) Fed Hiking Interest Rates – This week the federal reserve increased the fed funds rate by .75%. That is the largest monthly interest rate hike since 1994. The goal of interest rate hikes is to cool down the economy and reduce inflation. For stocks, rate hikes increase uncertainty which increases volatility. For bonds, rate hikes increase yields. That is the silver lining here, higher interest rates mean you can earn more interest on your cash and fixed income holdings. A 2-year treasury bond now pays over 3% interest. AP Wealth will help position client portfolios to take advantage of this.



6.) Tax Planning – If you have a taxable account, you may have holdings with unrealized losses. As we rebalance, we will consider harvesting those losses. This accomplishes two things. First, we can maintain your asset allocation, and second, we can use the realized loss to offset future realized gains and save you taxes.



7.) Investment Opportunity – AP Wealth views downturns as an opportunity to rebalance and invest excess cash clients have. When downturns like this happen, you can buy stocks at low prices. If you have additional cash that is not earmarked for a short-term goal, please let us know.



8.) Helping Others – AP Wealth is here to help families make good financial decisions. If you have family or friends that need support or feedback on their financial situation during this downturn, please share the AP Wealth name with them.



Your financial stewardship partners, 





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