Investors witnessed one of those typical but nerve-wracking stock market pullbacks in mid-to-late January. Inflationary pressure, potential monetary policy adjustments, and geopolitical concerns all conspired to send the stock market into a tailspin. 1 If there’s one thing investors should remember, it’s that none of this was completely unexpected, and that a market reset may frequently lead to better results.
It’s vital to remember that a buy-and-hold long-term strategy works because it’s based on fundamental stock selection, personalized asset allocation, and achieving particular objectives. A trader rather than an investor is someone whose goal is to make “X” amount of money in less than a year. We embrace and support a long-term approach in order to assist our customers in achieving specific financial goals. These sporadic market downturns aren’t always alarming, and they may frequently help a portfolio position itself for future success. We would be more concerned if a single stock were to fall owing to fundamental difficulties, but the performance of an entire sector or asset category is symptomatic of other variables that we, as investors and advisers, cannot influence.
Invesco believes that the Fed’s steady slowing of growth will assist to keep inflation in check this year. It further claims that while the omicron version will have a negative impact on growth in the first quarter of 2022, analysts anticipate that the losses will be more than made up for in the second quarter, potentially even sooner. 3
Despite the current sell-off in tech equities, BlackRock remains upbeat about the industry. “Underneath this year’s market sell-off, there are substantial swings, with tech stocks dropping and numerous cyclicals eking out gains….” Indeed, we believe that the tech sell-off has been aided by the waning omicron worries. In our sector views, we prefer a barbell strategy. As the tremendous restart continues, we like cyclicals, and beyond a tactical horizon, we still prefer good tech and health-care equities since we see them as beneficiaries of structural developments like digitization and the transition to a net-zero future.” 5
Content prepared by Kara Stefan Communications.
1 Ed Moya. MarketPulse. Jan. 21, 2022. “US Close: Market jitters ahead of Fed and massive earnings week, Netflix tanks.” https://www.marketpulse.com/20220121/us-close-market-jitters-ahead-fed-massive-earnings-week-netflix-tanks/. Accessed Jan. 24, 2022.
2 Merrill Lynch. Jan. 18, 2022. “Capital Market Outlook.” https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/CMO_1-18-22_Merrill.pdf. Accessed Jan. 24, 2022.
3 Kristina Hooper. Invesco. Jan. 18, 2022. “Have Omicron and the Fed changed our 2022 outlook?” https://www.invesco.com/us/en/insights/have-omicron-fed-changed-our-2022-outlook.html?twclid=11485705826467778562. Accessed Jan. 24, 2022.
4 David Solomon. Goldman Sachs. Jan. 18, 2022. “David Solomon on the Firm’s Performance, the Global Economy and What to Expect in 2022.” https://www.goldmansachs.com/insights/podcasts/episodes/01-18-2022-david-solomon-f/transcript.pdf. Accessed Jan. 24, 2022.
5 BlackRock. Jan. 24, 2022. “Weekly Commentary.” https://www.blackrock.com/corporate/literature/market-commentary/weekly-investment-commentary-en-us-20220124-trimming-our-treasury-underweight.pdf. Accessed Jan. 24, 2022.