December 23, 2022
I want to personally wish you a Happy Hanukkah, Happy Christmas, and a Happy New Year. As usual, there are many thoughts I would like to express, but two important themes come to mind:
My gratitude in having you as a part of the August Wealth family. Having a relationship with you genuinely enriches our life and it has nothing to do with money.
The awesome responsibility the team and I feel in helping steward your hard earned wealth through uncertain (as they always are) times.
I will provide a more detailed discussion of my market views in January, but here are some themes on my mind:
In December of last year, the Federal Funds rate was close to zero and expectations were it not to rise very much.
Market participants generally seemed comfortable that the economy and most markets were safe to invest in.
Rates now are much higher following the rise in inflation and prices across almost all asset classes are cheaper.
Market participants generally seem uncomfortable and uncertain about their investments.
Just because the market trades at cheaper levels does not mean it is a solid investment.
Inflation across many parts of the economy are coming down and I (and others) expect the year over year rate of CPI inflation to fall into mid 2023.
I expect economic growth will slow next year. Recession is possible, but nobody really knows. There is evidence for and against this.
Interest rates are offering much more attractive income streams to protect your purchasing power. Fixed income provides more certainty and less risky cash flows.
Potential risks are that a recession is severe (companies and governments cannot pay their debts), or that inflation is much higher than expected (purchasing power may be eroded or the Federal Reserve may raise rates much higher).
These probabilities exist, however my expectations are that: a) we are being compensated for assuming these risks, and b) in my opinion, these are not the most likely outcomes.
If inflation and growth come down without a severe recession, the Fed may pause hiking rates.
This may provide more near term certainty for companies and investors, and may present a nice opportunity for businesses and equity valuations to grow.
The dollar may fall from historically expensive levels in such a scenario. International companies could benefit.
As always, I take in a lot of information daily from many sources globally. Everyone has an opinion, but nobody really knows. My consistent advice:
Be careful about paying attention to any one piece of evidence, story, projection, expert opinion, etc. It may skew your judgement or cause an emotional response. Reality cares very little about our emotions
Take a long view, have faith in process, law, humanity, love, respect. Skeptics may tell you you are foolish. That is of no consequence.
Adjust your portfolio when the evidence and probabilities change (both in your personal life and financial markets). We gratefully execute this part for you.
Most importantly, focus on your family and friends this holiday season. Let go of pain and resentments, express gratitude for all the gifts you have been given, live in the present moment, and give those gifts freely to others that need you.
I promise that if you follow that last piece of advice, you have an excellent probability of a very Happy Christmas indeed. With love and gratitude, Joe Joseph Cardello, Principal August Wealth Advisors, LLC 51 Riverside Avenue, First Floor Westport, CT 06880 Direct (916) 461-9451 toll free (800) 985-9477 firstname.lastname@example.org www.augustwealthadvisors.com Important Disclosure Information Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by August Wealth Advisors, LLC (“August Wealth”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from August Wealth. August Wealth is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of August Wealth’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.augustwealthadvisors.com. Please Remember: If you are an August Wealth client, please contact August Wealth, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian. Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your August Wealth account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your August Wealth accounts; and, (3) a description of each comparative benchmark/index is available upon request. Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor; DBA August Wealth Advisors. Trading instructions sent via email, fax or voicemail will not be honored. There is no assurance that these messages can be retrieved on a timely basis, nor is there any sure method of confirming the customers identity. The information contained in this email message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying of this message is strictly prohibited. If you have received this message in error, please immediately delete.