Fourth Quarter, 2022
• Took advantage of highs before the downturn – For balanced clients with equity, fixed income, and cash, we sold excess equity allocations when markets were up in 2021 and early 2022, and rebalanced to fixed income and cash, according to stated investment objectives.
• Took advantage of the lows – We made tax trades during the downturn by selling equity and fixed-income positions with tax losses and reinvesting proceeds into similar positions to reduce client tax burdens in 2022, and carried forward any unused losses to shelter gains in the future.
• Equity diversification paid off – Morningstar’s U.S. value stock index was only down 8% versus their U.S. growth stock index, down more than 30%.
• Fixed income diversification paid off – W&A fixed income portfolio of 5 mutual funds includes 1 of only 2 bond funds that actively manage over $1 billion that had positive performance in calendar year 2022.
• Took advantage of higher interest rates – When possible, excess cash was held in Schwab money market funds with current yields as high as 4.27%.
Good news ahead? Bond yields are at their highest in more than a decade; savers are finally getting interest; and yes, investors can still buy stocks & bonds on sale now, which can lead to better returns in the future.
Remember the Rolling Stones song – You can’t always get what you want…but if you try sometimes, you just might find you get what you need.