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1st Quarter 2022 Review - What You Need to Know Thumbnail

1st Quarter 2022 Review - What You Need to Know

A set of difficult challenges faced the markets during the first quarter, leading to negative performance for both stocks and bonds.

The headlines have certainly rattled investors — inflation reaching levels not seen in decades, Russia invading Ukraine, and the Federal Reserve starting to increase interest rates.

U.S. stocks declined, with the S&P 500 losing 4.9%, and the tech-heavy Nasdaq dropping 9.1%. International stocks, represented by the MSCI World ex-USA Index, were down 4.8%. With interest rates rising sharply, bond prices fell, and the U.S. bond market (the Bloomberg U.S. Aggregate Bond Index) lost 6%.

With these strong headwinds facing investors, here’s what you need to know:

•    We’ve been through many periods of geopolitical risk and conflict. Each time, the most effective strategy is simply to stay diversified and remain invested. If your goals haven’t changed, your investment approach should not either.

•    History shows that stocks tend to outpace inflation over the long term — a valuable reminder for investors concerned that today’s rising prices will make it harder to reach their financial goals.

•    While bond prices are down for the quarter, in the long run higher yields are good news for investors. Bond funds should gain back those losses over time by reinvesting in new bonds offering higher rates.

We don't know how the markets will react in the short-run as current events unfold. The good news — we do know that sticking with a proven, effective strategy over the long run beats constantly trying to guess what will work over the next quarter or so.

As always, we are here to answer any questions.

David Rappaport, CFP®

David is the Co-Founder and Chief Investment Officer of Rappaport Reiches Capital Management. He acts as personal CFO to entrepreneurs and corporate executives, providing organization and clarity in their finances. Please connect with David below. He loves to talk about investing, financial planning, and Aspiritech, a non-profit hiring individuals on the autism spectrum.
The author does not intend to provide investment, legal or tax advice as these materials are for general educational purposes only. Please consult your legal, tax or investment professional for advice on your particular situation. This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. It is not intended to be a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results. Please refer to RRCM’s Form ADV Part 2 for additional disclosures regarding RRCM and its practices.