Third Quarter (Q3) 2022 Summary
- Stocks ended lower in Q3 after rebounding 18% from June lows and surrendering all by quarter-end. Now down three-straight quarters in 2022, following SP500 gains of 31.2%, 18.2%, and 28.8% in 2019, 2020, and 2021, respectively.
- Bond losses continued – making 2022 the worst year on record for fixed income markets.
- GPM stock portfolios lost ground with the market in Q3.
- Bear markets create excellent opportunities for longer term investors like GPM.
- GPM balanced portfolios declined less than stock accounts, helped by short duration bonds and substantial money market balances.
Brief Markets Recap
Financial assets worldwide remain mired in a bear market. Negative sentiment is driven by monetary policy tightening, high inflation, lingering but improving supply chain bottlenecks, and labor shortages. All are largely due to conflicted political and government policies that continued since the pandemic started in early 2020. The U.S. Fed and other central banks continue to hike rates to slow economic expansion to cool inflation. During the pandemic, governments injected massive amounts of “free money” fiscal stimulus which prompted a surge in demand for goods. Policymakers simultaneously enforced supply chain constraints and rules to restrict travel, services, and related spending, leaving even more to spend on goods. Stimulus driven demand and broad supply shortages put upward pressure on prices of nearly everything including housing and labor as many people left the labor force.