MWM Weekly Update

The Week of January 24, 2022

MWM Weekly Update

The Week of January 24, 2022

Koketsu ni irazunba koji o ezu – “You must enter the tiger’s den to catch his cubs” came to be used to indicate that no great enterprise can be successful without some risk taken.

Greetings Everyone,

Chinese New Year for 2022, the Year of the Tiger, will fall on Tuesday, February 1st and culminate with the Lantern Festival on February 15th. The celebrations will last up to 16 days the first 7 days are public holidays beginning on January 31st. The ground may be trembling as a full 20% of the world’s population will be celebrating using more fireworks than any other day of the year. People celebrate with good food, red envelopes particularly for children, and blessings for everyone.

I learned from a friend that in Vietnam the people go back home to the country for a week. It is a tradition to buy new clothes before the New Year to wear during the festival. They also like to clean the whole house to prepare and welcome the New Year.

We are fortunate that in Portland there is Lunar New Year Lantern viewing at the Lan Su Gardens (Chinese Gardens). Tickets are available for several evenings of viewing. The garden glows with hanging red lanterns illuminating sweeping roof lines and the Lake Zither reflects the lights of dragon and phoenix lantern sculptures.  To learn more: https://lansugarden.org

Jennifer Currin Gutridge celebrated a special birthday this week.  She has had an outstanding career as a CERTIFIED FINANCIAL PLANNER ™ professional
starting with the McGee team almost thirty years ago when she was still in college. Jenn began her life as the youngest of five with four older brothers in a ranching family in Heppner, Oregon. From cattle ranching to rodeo and high school sports, Jennifer’s childhood was filled with family, community, and friends. The Currin family was inducted in the Pendleton Roundup Hall of Fame. Jennifer and her mother, Judy were both Round-Up Queens. Jennifer and her husband Shane have two children; daughter, Cydney who attends Cal Poly and their son, Kallen who is a varsity athlete for Wilsonville High School basketball and football teams. We wish Jennifer a very healthy, happy, and prosperous year ahead.

Market Volatility
Market corrections are never fun, they are roller coaster rides and while they are frustrating and worrisome, they are part of investing over time and they’re a fact of life. We can’t predict them and can’t market time them successfully. Remember these things:

  • Financial Planning: We’ve prepared for it through in-depth planning and work we have done and continue to do with our clients and their families. We have stress-tested financial plans and portfolios to account for market volatility using Monte Carlo simulation.
  • Proactive, ongoing management: We don’t “set it and forget it”; we continue to update and stress test throughout the year. Constant, ongoing client communication to answer questions, give guidance and review cash flows. We will update your financial plans with new information. When life happens, we’re there.
  • Diversification: We’ve prepared for market volatility by building globally diversified portfolios between and across and within asset classes.
  • We don’t follow the crowd: We’ve prepared for market volatility by resisting to be all-in on trendy asset classes, products, companies, or strategies. We instead choose to remain prudently diversified and we focus on best practices in portfolio construction and implementation.
  • Systematic Rebalancing: The best way to prepare for market volatility is to put systems in place that remove or minimize emotional interference.  One way to do so is by systematically rebalancing, thereby removing the emotional biases of both advisors and clients from the process.
  • Strategic Implementation: Implementation matters. Understanding the underlying exposures of managers and how their portfolios are likely to respond during market selloffs is important.
  • Institutionalized Decision-Making: None of us is smarter than all of us. Not only is this true mathematically, it’s also the modus operandi for our investment team. Decisions are data-driven and always made with a focus on doing what’s in our client’s best interests.

Summary
2022 is the year of the tiger. This year, Tigers will encounter their birth sign year and they are expected to face many challenges according to the Chinese Horoscope.  They also suggest wearing red underwear and socks to help tigers ward off misfortune though I’m not so sure about this one.

We are grateful for you during good times and challenging ones. Corrections are normal and in fact, can be healthy as money managers review their opportunities and may find favorite holdings on sale. Be sure to let us know any time you need information or guidance.


Judith McGee, L.H.D., CFP®, ChFC®
Executive Vice President and Senior Lead Advisor

In the Markets

LAST WEEK
  • Volatility has engulfed the markets this month and is showing no signs of letting up, impacted by a more hawkish Federal Reserve stance, economic disruptions from Omicron, and risks to company profits due to rising costs. Fourth-quarter 2021 corporate earnings season has begun with uneven results so far. Inflation continues to hover over investors as they anticipate a bump in interest rates for the first time in three years, with the first increase likely coming in March. Demand for 10-year Treasuries has driven prices higher, sending yields lower for the first time in five weeks. With last week's losses, both the Nasdaq and the Russell 2000 have declined nearly 12.0% in January. The Nasdaq is in correction territory, down over 10.0% from its November peak, hitting its lowest level since June 2021.
  • Wall Street continued its January swoon last Tuesday, falling lower to start the holiday-shortened trading week. The Nasdaq dropped 2.6%, recording its lowest close since October. The Russell 2000 fell 3.1%, the S&P 500 dipped 1.8%, the Dow declined 1.5%, and the Global Dow lost 1.1%. Investors continued to weigh the anticipated interest-rate hikes by the Federal Reserve, which meets this week. Ten-year Treasury yields jumped nine basis points to 1.86%. The dollar gained 0.5%. Crude oil prices rose to $85.89 per barrel. Among the market sectors, energy was the only gainer. Information technology (-2.5%), financials (-2.3%), and communication services (-2.0%) fell the most.
  • The slide continued for stocks last Wednesday. Each of the major benchmark indexes lost value. The Nasdaq extended losses, dropping more than 10.0% from a November high, falling into correction territory. The small caps of the Russell 2000 declined 1.5%, followed by the Nasdaq (-1.2%), the Dow and the S&P 500 (-1.0%), and the Global Dow (-0.8%). Ten-year Treasury yields dipped, despite projections that yields will cross the 2.0% threshold, possibly within the first six months of the year. The dollar also slipped lower. Crude oil prices continued to climb, reaching $86.50 per barrel. Consumer staples and utilities were the only market sectors to gain ground. Consumer discretionary and financials each fell 1.7%.
  • Higher-than-expected jobless claims didn't help investor confidence, as equities dipped lower again last Thursday. Dip buyers sent stocks higher earlier in the day, but the rally did not last as each of the major benchmark indexes gave back any gains to close in the red. The Russell 2000 (-1.9%) led the declines, followed by the Nasdaq (-1.3%), the S&P 500 (-1.1%), the Dow (-0.9%), and the Global Dow (-0.3%). Crude oil prices moved slightly lower on Thursday, down 0.7% to around $86.29 per barrel. Ten-year Treasury yields and the dollar crept higher.
  • Stocks fell again last Friday, with tech shares leading the selloff following shaky corporate earnings data. The S&P 500, which slid 1.9%, closed below its 200-day moving average for the first time since 2020. The Nasdaq dropped 2.7% and the Russell 2000 lost 1.8%. The Dow (-1.3%) and the Global Dow (-1.6%) also ended the day in the red. Ten-year Treasury yields, the dollar, and crude oil prices also declined to end the week.

THIS WEEK

There's plenty of economic news to watch for this week. The first estimate of the fourth-quarter 2021 gross domestic product is out. The economy advanced at an annualized rate of 2.3% in the third quarter, well off the 6.7% growth rate in the second quarter. The December figures on personal income and spending are available this week. Personal income rose 0.4% in November, consumer spending advanced 0.6%, while prices for consumer goods and services climbed 0.6% for the month and 5.7% since November 2020. Aside from these important economic reports, all eyes will be focused on the Federal Reserve, which meets this week. It is expected that the Fed will continue to address rising inflation by further reducing stimulus and projecting interest-rate increases beginning this March.

Source: Broadridge Investor Communication Solutions, Inc.

Articles & Education

Market Update – September 14, 2022

Women: How to Slay Your Money Dragons at Any Age

Our female advisors discuss best practices for gaining financial independence through the various phases of a woman’s life.
Investment Term of the Week

Thought of the Week

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