Historic Start to 2022
We trust you are well and enjoying the kick off to summer! Hopefully you will make some time to get out and enjoy the sun and to seek out some adventures through these fantastic months of the year.
With the first half of the year behind us, we thought it would be timely to reach out with an update. As we are sure you are aware, the start to 2022 has been eventful for our world. Between inflation affecting our everyday purchases, war ongoing in Ukraine, Covid concerns remaining present, and endless rainy weather gracing our skies, there has been no lack of news to be reported.
The strong spike in inflation and the way it is being combated by various central banks globally has had a major impact on Canadians in the first half of the year. To slow inflation and the impact on our pocketbooks, central bankers have raised interest rates aggressively as a tool to help mitigate its impact. The use of this strategy by government slows economic growth and we are seeing that reflect in investment portfolios around the world. We do expect this strategy to be impactful and that inflation will slow over time.
Fortunately for long-term investors, short-term market turbulence like we are experiencing today will have little impact on long-term growth goals. We view market corrections as opportunities to purchase assets within the portfolio at discounted values that we will then hold into the future. Our portfolio management teams are hard at work these days ensuring that we mitigate risk, take advantage of market opportunities, and focus on ensuring your long-term goals are achieved as we move forward.
Although not enjoyable, market corrections are part of long-term investing and can be expected at a historical average of 1 in every 6 years. The last 14 years we have seen uncharacteristic low volatility and solid growth in the stock market. The first two quarters of this year will have been the toughest we have seen in 52 years (since 1970). Interestingly enough, 1970 finished the year with a positive rate of return despite starting out with negative results through the first half of the year. Our expectation is that the turbulence will remain until inflation slows at which time we will start to see growth expectations shift positively within portfolios. This too shall pass and the solid basket of high-quality companies and bonds that we invest in will rebound to grow your wealth for years to come.
Although we know that negative returns are always a possibility, we recognize that this does not make it any easier for you to be experiencing. Our team is committed to journeying through these volatile days with you and are working hard to ensure that all your future goals and targets are comfortably achieved. Please know that we are available to you if you ever have any questions and welcome you to reach out.
The Driediger Wealth Planning Team