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F E A T U R E D A R T I C L E
Three Takeaways from 2022 &
Looking Ahead to 2023
Key Points
2022 was an exceptionally bad year as inflation and higher interest rates wreaked havoc on markets.
2022 is the only time in history where stocks and bonds each fell by more than 10% and even traditional inflation hedges failed to protect portfolios.
Looking ahead to 2023, the singular focus on inflation will likely shift to growth and likely bringing new surprises for investors.
Last year was an exceptional year, and not in a good way. There was no shortage of worries during the year from COVID-19, the Ukraine war, and the most central story of all: inflation and interest rates. This month, we identify the impact of inflation on markets and whether investors should expect more of the same or changes in 2023.
Stocks and bonds fell 10% for the first time on record
In 2022, the Federal Reserve (Fed) switched its narrative from transitory inflation to one committed to taming the inflation beast. The Fed raised interest rates seven times from 0.0% to 4.25-4.5% in merely 10 months. This surge in interest rates hurt both stocks and bonds. Stocks, as represented by the S&P 500 index, fell 18.1%, its worst year since 2008 and the sixth worst on record. Meanwhile, bonds, as represented by the Bloomberg US Aggregate index, had its worst year since the inception of the index in 1976, falling by 13.1%i.
Losses in stocks are not new. Losses within bonds are less common but also have occurred previously. What made 2022 unique is how sharply stocks and bonds fell simultaneously. Last year was only the sixth time since 1926 that both the S&P 500 and Bloomberg US Aggregate declined. What’s truly remarkable is that it was the only time in history where both stocks and bonds each fell by more than 10%, as seen in the chart on the next page.
Source: Ned Davis Research. The 22 charts of 2022.
Boring was beautiful
While it was a hellish year for stocks, not all stocks fared the same. Over the past decade, fast-growing technology companies dominated returns when compared to those of more “boring” companies. That trend reversed course sharply in 2022 as investors were more focused on companies that made goods and have shown resiliency through varied economic cycles. The Nasdaq index, often synonymous with technology stocks, fell 32.5%, while the blue-chip stocks listed on the Dow index fell 6.9%, marking a difference of nearly 26%. It’s not that technological innovation is no longer valuable, but many of these companies were priced for perfection, and higher interest rates called into question earnings potential for many of these companies that were still years away from profitability.
Source: FactSet.
Traditional inflation hedges did not work either
Last year wasn’t challenging for only stocks and bonds. It also was a surprisingly challenging year for investments that were considered inflation hedges. Real estate, gold, and even bonds aimed at protecting against inflation, known as Treasury Inflation-Protected Securities (TIPS), all lost money in 2022ii. Even claims of cryptocurrency as an inflation hedge proved false. Bitcoin was down 75% from its peak toward the end of 20221iii. Except for commodities, there was no place for investors to hide.
Source: FactSet.
Looking ahead to 2023
In 2022, the only thing that mattered to markets was inflation and the Fed’s focus on taming the inflation beast. This singular focus will shift in 2023 from inflation to growth since inflation has likely peaked and is falling, and the economy is slowing.
For riskier investments like stocks, even if the economy avoids an official recession, profit growth for companies likely will slow in 2023. Additionally, stock investors probably will become more focused on which companies can better weather that slowdown, a continuation of the trend we saw in 2022. However, while caution is warranted, economic uncertainties should not be used as a market timing tool. Markets are forward-looking and will likely bottom before the worst of the economic news is over.
Bonds, on the other hand, are unlikely to repeat the carnage of 2022. Higher starting yields should provide a better buffer from additional rate hikes. In fact, investors finally have reasonably attractive opportunities within bonds as they wade through continued uncertainty.
Finally, 2022 was a reminder of the importance of having a well-thought-out financial plan. It is a reminder that no matter how good or bad any single year proves to be, it should not derail one’s investment goal. Investing is a multi-year process and should accommodate even an exceptionally bad year. To that end, good riddance to 2022. Be glad it’s behind us.
i FactSet
ii Gold represented by Bloomberg Sub Gold; Real Estate represented by S&P 1500 Equity Real Estate Investment Trusts
iii Coindesk
Important Information
This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information in this report has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.
Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation. It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Index performance assumes the reinvestment of dividends.
Investments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange-traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.
Bloomberg® and the referenced Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, (collectively, “Bloomberg”) and are used under license. Bloomberg does not approve or endorse this material, nor guarantees the accuracy or completeness of any information herein. Bloomberg and AssetMark, Inc. are separate and unaffiliated companies.
AssetMark, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission.©2023 AssetMark, Inc. All rights reserved.
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AssetMark, Inc. - 1655 Grant Street 10th Floor Concord, CA 94520-2445 800-664-5345
Smart Shopper: Keep Your Money Safe With These Online Shopping Security Tips
The 2022 holiday gift season is now in the rear-view mirror. If you’re like many other people, chances are you did a good amount of shopping online. After all, online shopping can be easy and fun. But unfortunately, there are many scammers who want to steal your identity and money.
According to a January 2022 Federal Trade Commission report, more than 95,000 people reported about $770 million in losses to fraud initiated on social media platforms in 2021 (the most recent data available). Reports were up for every age group, but people 18 to 39 were more than twice as likely as older adults to report losing money to these scams.
It’s a new year and full of opportunities to learn and grow. Review the following information for tips on ways you can protect your personal information and finances when shopping online this year.
Verify the Website
Only shop on secure websites with good reputations. Check for the small, locked padlock icon in the address bar. The address should start with https://. In addition, check the spelling of the URL. Scammers use similar spellings to fool you into thinking that you are on the true retail company’s website. You’ll also want to perform an online search of the seller. Use the seller’s name and the word “scam” to vet them before sending any money.
Trust Your Instincts
Beware of deals that seem too good to be true. In addition, be vigilant when websites or social media ads link to an unfamiliar website. Look for typos and missing contact information. Other red flags are poorly written or missing sections such as About Us, Privacy Policy and Terms and Conditions. If something just doesn’t feel write, click off the site.
Manage Risk
Don’t shop online using a public Wi-Fi. Public Wi-Fi is not secure and increases your chance of being hacked. In addition, use a credit card. That way, if you get scammed, you can dispute the charges. You should also consider checking out as a guest if possible. That way, your data won’t be retained by the company.
(CALLOUT)
Always report scams right away to your bank and the Federal Trade Commission. For information on how to report fraud, go to: https://reportfraud.ftc.gov/#/
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com
©2022 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.
Everything to Know About Super Bowl LVII: Where to Watch, Who’s Playing and More
Grab your pom-poms and popcorn! Super Bowl LVII kicks off on Sunday, February 12, and sports fans near and far are already counting down the days until it starts.
The road to Super Bowl 2023 began with the NFL’s first Super Wild Card Weekend in January. Over the span of three days, 12 teams left it all out on the field to see which six teams would advance to the Divisional Round — and join the No. 1 seeds in the AFC and NFC — to make the final eight count.
The Kansas City Chiefs, who were the No. 1 seed in the AFC, remained triumphant over the Jacksonville Jaguars during their January 21 game. The NFC’s No. 1 seed The Philadelphia Eagles also remained victorious the same day in their matchup against the New York Giants. Viewers had to watch two more games — between the Chiefs and the Cincinnati Bengals and the Eagles against the San Francisco 49ers — on Sunday, January 29, to learn who would be facing off in Super Bowl LVII.
When it came to the AFC Championship both the Chiefs’ Patrick Mahomes and Bengals’ Joe Burrow have played in a Super Bowl — and Mahomes has won one Vince Lombardi trophy. On the NFC side, Eagles quarterback Jalen Hurts and 49ers backup quarterback Brock Purdy are new to the Super Bowl conversation. Ultimately, Mahomes’ squad triumphed over the Bengals and will face the Eagles for Super Bowl LVII.
In addition to watching the big game, FOX announced in January which performers would be entertaining the crowd in Arizona on February 12.
Though rumors swirled that Taylor Swift would be taking the stage at the 2023 Super Bowl Halftime Show, Rihanna was confirmed as the performer in September 2022. The decision left Rihanna fans desperate for a new album and psyched for her performance and potential new music.
The “Umbrella” songstress has been toying with her loyal followers since December 2018 when she teased that her next album was coming in 2019. The record, R9, has yet to drop, but Rihanna’s Super Bowl performance has many thinking the album is near. January 13 teaser for her halftime gig.
When Is Super Bowl 2023?
Super Bowl LVII will take place on Sunday, February 12. Kickoff begins at 6:30 p.m. ET.
Which Teams Are Playing in Super Bowl LVII?
The teams were determined after the AFC and NFC Championship games were played on January 29. The Kansas City Chiefs faced off against the Cincinnati Bengals to represent the AFC in the Super Bowl. The Philadelphia Eagles and the San Francisco 49ers, meanwhile, battled on the field to stand up for the NFC. In the end, the Chiefs earned their spot in the big game where they will play the Eagles.
Where Is the Super Bowl Being Played?
Fans will flood State Farm Stadium in Glendale, Arizona, for this year’s big game.
Where Can You Watch the Super Bowl?
Viewers can tune in to FOX for complete Super Bowl coverage. If you don’t have access to the channel, the game will also be available to stream on Hulu+, fuboTV or Sling TV.
Who Is Making History?
For the first time in NFL history, two brothers, the Eagles’ Jason Kelce and the Chiefs’ Travis Kelce, will play against each other in the Super Bowl. Brothers Jim and John Harbaugh previously coached against one another in the 2013 Championship. Siblings Jason and Devin McCourty, meanwhile, made history in 2019 when they took home the Lombardi trophy as members of the New England Patriots, becoming the only twins to win a Super Bowl together.
Who Is the 2023 Super Bowl Halftime Act?
Rihanna was announced in September 2022 as the headliner for Super Bowl LVII.
Who Will Sing the National Anthem at the 2023 Super Bowl?
Chris Stapleton will kick off the big game by singing the “Star Spangled Banner.” The “Tennessee Whiskey” crooner isn’t the first country singer to perform the honor. Luke Bryan took the stage in 2017 and Mickey Guyton sang the National Anthem in 2022.
Fox announced on January 24 that Stapleton will be accompanied by Arizona native Troy Kotsur — who won an Oscar for CODA — who will perform the song in American Sign Language (ASL).
Are There More Super Bowl Performers?
Babyface will entertain fans with his rendition of “America the Beautiful” before the game starts. Colin Denny, who is a deaf member of the Navajo Nation in Arizona, will sign the song alongside the rapper.
Emmy-winning actress Sheryl Lee Ralph was announced on January 24 as the performer for “Lift Every Voice and Sing.” The Abbott Elementary star will be accompanied by deaf artist Justina Miles, who is set to do the ASL rendition of Rihanna’s halftime show as well.
Title: Everything to Know About Super Bowl LVII: Where to Watch, Who’s Playing and More
Source: https://www.usmagazine.com/entertainment/pictures/super-bowl-lvii-what-to-know-about-the-2023-football-game/
Author: Johnni Macke
© a360media 2023. All rights reserved.-
-Recipe of the Month-
Pomegranate Guacamole
INGREDIENTS:
4 medium ripe avocados, pitted and diced
2 tablespoons fresh lime juice
2 garlic cloves, pressed or minced
1 teaspoon salt
½ medium red onion, chopped
¼ cup fresh cilantro, mostly leaves, chopped
1 to 2 jalapeños (or 1 serrano pepper), seeded and chopped
1 medium pomegranate, deseeded
Entirely optional: ½ cup crumbled feta
INSTRUCTIONS:
With a spoon, scoop the avocado flesh into a medium-sized mixing bowl. Add the lime juice, garlic and salt. Mash the ingredients together with a large fork or potato masher until the avocado is nice and creamy.
To ensure that the onion flavor doesn’t overpower the guacamole, rinse the chopped onion under running water (I used a fine mesh colander). Pat the onion dry with a paper towel.
Add the onion, chopped cilantro and jalapeño to the bowl and mix well. Gently stir in ½ of the pomegranate arils. For extra presentation points, transfer the guacamole to an appropriately sized serving bowl now. Sprinkle remaining pomegranate arils over guacamole, along with some additional chopped cilantro and totally optional feta, if you’d like. Serve immediately.
Sources: https://cookieandkate.com/festive-pomegranate-guacamole/; Produceforkids.com