CFG Wealth Management – Comments on Recent Market Volatility and What’s Ahead

Dear Client:

After a strong rally through the second half of March, where the S&P 500 Index saw a strong gain of 8.56% from the mid-month bottom, selling in stocks resumed in April. There are a number of headwinds markets are dealing with at them moment, but the April selling was triggered primarily by what the market construed as a more aggressive Federal Reserve stance on interest rates and their attack on inflation, rising recession calls and concerns surrounding the lockdowns in China and the potential global economic impact.

For the month through April 27^th, the S&P 500 was down 7.65%, and is now down 12.22% year-to-date and back into correction territory. The S&P 500 Index has come down and touched the same double low point it saw on both March 8^th and March 14^th, which is commonly referred to as a retest. As of this writing, the market has once again bounced off that low, although it remains to be seen whether or not it holds. Either way, while there is a chance that we could see that low mark breached and a new low made, it appears likely at this point that any further declines should be shallow with upside potential through the remainder of the year exceeding downside risks. While recession risks are most certainly rising, we do not expect to see anything close to recession until next year at the earliest, and over history, stocks often rally into recessions rather than decline into them. Even then, recession is not yet a foregone conclusion.

We understand that corrections like this can make us fearful and anxious about the future. As humans we are pre-wired to exhibit a far stronger emotional response when there is a loss of value than in gains.  It is important to remind ourselves however that periods of declines do eventually pass, and for many of the reasons mentioned in our March commentary, we see no reason it will be different this time. Some excesses born out of the Covid period are being unwound, which in the end is a positive, and sets the stage for another expansionary period. This is the cyclical nature of markets and our economy. This is where an asset allocation that is appropriate for your individual situation is most important, and why we manage your portfolios with diversification and risk management in mind.

Given the market action in April, we’ve decided that certain opportunities have been created and that our portfolios will benefit from a rebalance and reallocation. Beginning next week, we will be initiating trades in many of your accounts that will rebalance positions to targets, as well as make some positioning changes to certain asset classes based on our current views and near-term outlook. However, we are delaying reallocating and rebalancing portfolios that are on an income distribution for a later time, as we feel it would be best to continue to generate cash from bonds and more defensive assets for a while longer. Please feel free to contact us if you have any questions about these moves and how it may impact your portfolios.

Investors have experienced a difficult start to year by any measure, and your April monthly account statement values will most certainly reflect that. We want to emphasize that if you have individual concerns or questions, we are available to meet with you to address those concerns and review your investment results and strategy moving forward. Whatever your individual situation is, rest assured that we are monitoring your portfolio closely and we will contact you if we feel any short-term measures should be taken. However, we remain confident in the current fundamental economic environment and growth forecasts and feel strongly that the market will work through its issues. While we think markets may continue to be choppy for the next couple of months, we also think that the stage is being set up for what might be a strong back half of the year. We urge patience and calm as the markets work through this.

If you would like to schedule a meeting over the phone, or to schedule a face-to-face in our office, please be sure to call the us at your earliest convenience at (858) 550-3960 or (800) 884-5121.

 

Sincerely yours,

 

Graydon Coghlan, CRPC – President/CEO
Registered Representative, Securities America, Inc.
Financial Advisor, Securities America Advisors, Inc.
CA Insurance License #0B31440

 

4370 La Jolla Village Drive, Suite 630
San Diego, CA 92122
(858) 550-3960 (phone)
(858) 550-3969 (fax)
www.cfgwmt.com

 

All opinions and estimates included are as of the date listed and are subject to change without notice. This letter is provided for informational purposes only. It is not intended as an offer or solicitation with respect to the purchase or sale of any security or offering of individual investment advice. The S&P 500 Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. An investor cannot invest directly in an index. Past performance does not guarantee future results.

Securities offered through Securities America Inc., a Registered Broker/Dealer Member FINRA/SIPC, Advisory services offered through Securities America Advisors Inc., an SEC Registered Investment Advisor, CFG Wealth Management and Securities America are not affiliated.  Trading instructions sent via e-mail may not be honored. Please contact my office at (858) 550-3960 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential, and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.  04/22

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