Investment Update: May 2022
Dear Ambassador Family,
Here’s A Brief Update on Your Investments:
We still maintain that same view. Monitoring economic and corporate earnings data thus far reported it is possible that the choppy volatility in the market environment might persist for a while. As mentioned previously, factors include:
- Inflation (raw materials scarcity an issue, looming wage increases could complicate the picture)
- High traditional asset market valuations
- Risk to corporate profit margins from cost inflation, hence earnings at risk
- Tighter monetary policy
- Risk of economic recession
- Geopolitical tension (while lower on our scale of worries, it does feed through)
Offsetting potential risks, investor sentiment near-term appears to be depressed (a contrarian indicator compared to the frothiness in 2021 following a strong market recovery). Additionally, current interest rates remain low in historic terms.
As a reminder, we have been reducing risk since last year:
- Reduce buckets in traditional asset classes (fixed income and equities), including amounts and more volatile sectors (credit, small-cap)
- Increase diversified bucket (hedged equity manager, select commodities)
- Increase cash (dry powder to take advantage of opportunities when appropriate)
We remain vigilant of market risks and opportunities. Our bias remains moderately cautious, particularly on most fixed income and equities. As opportunities or risks present themselves, we anticipate making more changes to your portfolios.
We will continue to keep you updated.
Petr Burunov, CFP®
President / Wealth Strategist