Signature Wealth Market Update

September 2022 Market Update

As of mid-afternoon on September 23, the S&P 500 is re-testing the lows it hit in June.  This isn’t unprecedented as the stock market has a history of re-testing lows.  I wrote in August that I expected a pullback, although not to this extent.

The culprit is the rapid change in interest rate policy by the Federal Reserve.   It was understood that the Fed would raise rates this year, and that it would stop accumulating long-term bonds (quantitative easing).  What was not understood was the Fed’s aggressiveness in rate-hiking, especially given its easy-money policies of the past decade.  

I’d recommend keeping in mind that, as author and behavioral finance expert Morgan Housel wrote, “Volatility is a fee, not a fine.”  He means that fees are the price we pay for something valuable, in this case, potentially good long-term returns in stocks.  Fines, on the other hand, are punishment for doing something wrong.  I have often written that if there were no volatility in stock prices, you’d likely get a return that looked more like bonds or CDs, which is much less than what stocks have returned, over the long-run.

I’ll have further comments in my October letter, but for now, let’s see if we can hold those June lows on the S&P.  If we do, I think the market is setting up for a good year-end move higher.  If we don’t hold, there is a likelihood of lower stock prices.  

As always, these opinions are mine, and may or may not be the same as those of Raymond James.  This is not a solicitation to invest, although we do invite you to review your portfolio with us to see if any changes should be made.  

Past performance may not be indicative of future results. There is no assurance any of the trends mentioned will continue or forecasts will occur.  Investing involves risk including the possible loss of capital. Asset allocation and diversification do not guarantee a profit nor protect against loss.  There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise.

The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. 
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Individuals cannot invest directly in any index.   The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal.  The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. U.S. government bonds and Treasury notes are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury notes are certificates reflecting intermediate-term (2 – 10 years) obligations of the U.S. government.  Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. 
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Scott Mitchell and not necessarily those of Raymond James.  Expressions of opinion are as of this date and are subject to change without notice.  Raymond James does not provide tax or legal services.  Please discuss these matters with the appropriate professional.

About Scott Mitchell

AAMS ®, Chief Investment Officer SWG, Senior Wealth Advisor RJFS, Scott is a cum laude graduate of Wake Forest University School of Business. He received additional training from the College of Financial Planning and earned the accreditation of Accredited Asset Management Specialist℠ as well as earning the Accredited Investment Fiduciary® designation.  Scott began his career at Southern National Bank. He then joined his father, Bob Mitchell, at First Union Securities for six years. At Signature, Scott directs investment strategy for the team and oversees the research and management of individual stocks, bonds and mutual funds. Scott lives in Florence with his wife and two children. He is a member and past President of St. Luke Lutheran Church, member and past President of the Florence Rotary Club, and on the board of directors of the Pee Dee Area Big Brothers and Big Sisters. Follow Scott on LinkedIn. Raymond James is not affiliated with any of the above-mentioned organizations.