April 8, 2022
Recap | Returns | News
Market Health Indicator
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
The Oracle of Omaha strikes again.
Berkshire Hathaway, the diversified holding company led by 91 year young Warren Buffett, announced an agreement to buy insurance company Alleghany for $11.6 billion.
The deal may be surprising as Buffett has been openly expressing frustrations about a lack of new investment opportunities and larger acquisition targets (this marks Berkshire’s largest transaction in six years).
However, the nature of the company in the deal is much less surprising. Insurance companies make up about a fifth of Berkshire’s profits (it already owns Geico among others).
Buffett stated “Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years.”
Who says you can’t teach an old dog his old tricks?
- It’s the (second) most wonderful time of the year… Tax Day is Monday, April 18.
- Play ball! After a 99 day lockout, baseball is back. Opening day this year will be April 7, just about a week later than normal.
- In a typical day, the “Skip Intro” button on Netflix is pressed 136 million times!
- The Boston Marathon, the world’s oldest annually run marathon, made its debut in April 1897.
March 2022 Recap
Markets breathed a sigh of relief in March, helping ease some of the pressure in what turned out to be a volatile first quarter of the year.
Despite ongoing concerns surrounding inflation, interest rate hikes, and the Russia – Ukraine war, markets experienced a mid-month relief rally which pushed US stocks higher in March. Following the reversal, major indices closed the month in positive territory with gains of 3.58% for the S&P 500, 3.41% for the tech-heavy Nasdaq, and 2.36% for the Dow Jones Industrial Average.
With the positive movement, markets have recovered the losses (and then some) from the initial shock of the war, but remain negative year-to-date. As we begin the second quarter of 2022, investors will continue watching inflation data and interest rates as many experts believe these factors could have a major impact on US stock market direction throughout the remainder of the year.
Overseas, stocks lagged behind as the ongoing war has caused more stress to countries in closer geographic proximity. Developed international stocks were able to close the month slightly positive with a gain of 0.67%, but emerging markets fell 3.26%. China’s decision to shutdown major cities amid another Covid outbreak especially weighed on emerging market stocks during the month.
While riskier asset classes were mostly positive in March, bonds continued to slump. The 10-year Treasury yield soared higher from 1.83% to 2.32%, causing aggregate bonds to lose 2.78%. It’s been a tough year for bonds so far, but there is a silver lining. Higher starting yields today mean higher expected returns in the future (though there could still be some continued volatility in the near-term).
Overall, the first quarter of 2022 was somewhat negative, but maybe not quite to the extent as what major headlines have indicated. While it’s never enjoyable to watch markets move lower, this is a normal part of investing over the long-run. In fact, the S&P 500 has been negative in about 30% of quarters over the past 50 years. Good news is that markets are much higher than they were 50 years ago, even with these normal quarterly speed bumps along the way.
Started from the bottom, now we’re here…
On March 16 the Fed announced a 0.25% interest rate hike, in line with expectations.
More importantly, the committee provided some insight into the expected path ahead, projecting rate hikes in each of the six remaining meetings this year (next up is May 4).
This is important because the fed funds rate can flow through to interest rates throughout the economy, from credit cards to mortgages.
As the Fed looks to combat accelerating inflation, investors are watching to see if they can walk the tightrope. Hike rates too slowly and inflation could linger, but hike rates too quickly and economic growth could turn sluggish.
Chairman Jerome Powell stated he believes the economy is strong enough to stomach further increases without elevating recession risk.
Recent Blog Posts
How Much Are Markets Really Up In 2023
Coming off one of the worst years in recent history, it’s no question 2023 has been a better year for the markets so far than 2022.
May 2023 Market Watch
Following a bumpy March, the S&P 500 traded in a narrow range of just 3% throughout the entire month of April.
April 2023 Market Watch
It was a bumpy month for equity markets as uncertainties in the banking industry led to a handful of bank closures and a spike in volatility.
Winnow Wealth, LLC (“Winnow Wealth”) is a Registered Investment Adviser.
The information presented is not investment advice – it is for educational purposes only and is not an offer or solicitation for the sale or purchase of any securities or investment advisory services. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser when making investment decisions.
This content is intended to provide general information about Winnow Wealth. It is not intended to offer or deliver investment advice in any way. Information regarding investment services are provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
Past performance is no guarantee of future returns.
Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable.
Additional Important Disclosures may be found in the Winnow Wealth Form ADV Part 2A. For a copy, please Click Here.