ESG is not a cure-all for the environmental or social challenges we collectively face. It can, however, serve as a valuable tool for investors to reduce specific portfolio risks and align their investments with a changing world.
Markets are starting this year from more reasonable valuations and with bonds yielding stronger income than prior years. This balance should benefit patient investors and diversified portfolios as they navigate short-term storms and begin rebuilding portfolio values.
The economic and market landscape still includes plenty of uncertainty, but it is a welcome sight to see portfolios rebuild some value early in the year.
Financial markets can have phases of directionless wandering as investors await more information. We may be in one of those moments right now.
Q4 2022 Market Commentary
Financial markets, much like our weather, are usually mild and uneventful. What sticks in people’s minds, however, are the extreme events.
As inflation emerges from a long hibernation, the impact on consumers is acute. It's important to acknowledge that inflation has been a normal and recurring part of economic growth throughout history - and can have some silver linings.
Market movements can feel chaotic over the short term, and the noise of daily market headlines can make investors question whether the historical patterns of growth will continue to hold true.
While financial markets may breathe a sigh of relief following midterm election results, the present reality is that ongoing concerns about global recession, high inflation, and tighter central bank policies could limit the enthusiasm of any post-election rally.
It is human nature to assume that a current trend will continue unimpeded and that equity prices will continue to fall without relief. Reality rarely unfolds in such straight lines.
Q3 2022 Market Commentary
The essence of elasticity is reversibility. While financial markets don't behave in such simplified ways, the same concept can be helpful to consider during periods of dramatic price appreciation or decline.
The question facing investors in the near term is how to interpret the interconnectedness of the broad economy when presented with quarterly earnings data from a single company.
Investors often expect the status quo to continue indefinitely but markets can change course rapidly. There are measurable benefits to balancing historically-rooted optimism and a timeframe that extends beyond the present moment.
Consumer demand for ESG funds signals that the long-term trajectory for sustainable investing is on solid footing despite growing pains and political noise from both sides about imperfections.
Although there’s confusion around the definition of a recession, it’s helpful to remember that periods of economic slowdown – whether they are officially deemed a recession or not – are a normal part of the economic cycle.
Similar to other assets, currency markets have cycles and are sensitive to the near and intermediate-term outlook for the global economy. As the US dollar gains strength on global markets the results of the appreciating currency remain complex.
Q2 2022 Market Commentary
Reflecting on past periods of economic and political turbulence won’t provide a precise roadmap for the current moment, but it can provide a comforting reminder about the longer arc of progress.
For investors, watching the value of their portfolios decline is often uncomfortable, which highlights a fundamental challenge during periods of market turbulence: we are invested for the long-term, but we live our lives in the short-term.
Being a long-term investor means tolerating periods of uncertainty, and knowing that they will also lay the foundation for the growth that will follow.
While we can't predict how long stock price declines will last, we are committed to calmly maintaining stock exposure and regular rebalancing.
The current pace of change has disoriented investors and put downward pressure on prices and this volatility may not subside in the short-term.