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Invasion, Inflation, Recession? 2022 in Charts

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January 9, 2023

First off, Happy New Years and Congratulations – 2022 is done, over and in the books. I don’t know about you, but I was so thankful to see the 2022 calendar year come to a close.

The Russian invasion of Ukraine, record inflation, potential recession on the horizon – it’s fair to say that 2022 was challenging on many fronts. For investors, this context has resulted in pullbacks for both stocks and bonds in the first half of the year, followed by a six-month period of ups and downs with no clear direction. Sentiment has also been pessimistic for most of 2022, at times reaching lows last seen during the Great Financial Crisis.

In sum, most market segments showed losses in 2022, with record declines for bonds. In terms of leadership, the best performance came from assets more closely linked to commodity prices, including the Canadian stock market. Conversely, the bottom of the list belongs to stocks that are more sensitive to interest rate movement, such as the U.S. technology giants (Apple, Microsoft, Alphabet, Amazon, Meta, etc.).

Investment decisions must always be forward looking but with the calendar flipping to a new year it’s important that we take a moment to reflect and look back at the major events that transpired in 2022 through some key charts to help provide you some perspective on a year, that in a nutshell, investors will remember as ‘the perfect inflationary storm.’ See attached and thanks in advanced for taking time out of your day to keep informed.

In this environment, active management is paramount at this stage of the cycle, as market dislocations caused by the volatile geopolitical and macroeconomic environment have created attractive opportunities to add value to investor portfolios.

For investors, I believe the best course of action is to stay invested and stick to your long-term asset allocation. This is no time for long-term investors to become demoralized. Markets are inherently forward-looking and much of the negative headlines and expectations have already been priced in.

Your patience and understanding at this time does not go unnoticed.  Trust my commitment to you and your goals during these volatile times does not waiver and I am always here if you would like to discuss markets and your portfolio in further context.

“Bull markets are born on pessimism, grow on skepticism,

mature on optimism, and die on euphoria”

-       Sir John Templeton

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