In case you missed our quarterly Market Review & Economic Outlook discussion with guest speaker Liz Ann Sonders of Charles Schwab, and HoyleCohen’s Chief Investment Officer, Vanessa Wieliczko, summary below.
January 19, 2022
By Vanessa Wieliczko, CFA, CAIA, CFP®
Chief Investment Officer, HoyleCohen
In a recent webinar, I had the pleasure of sitting down with Liz Ann Sonders, Chief Market Strategist at Charles Schwab, as we took a moment to reflect on 2021 and to discuss possibilities for the future.
We began our conversation with a focus on the economy. Most notably, the unique nature of a pandemic induced recession, that exhibits more similarity to a war-time recession than a traditional recession. One characterized by government intervention and shutdowns, demand-led supply chain disruptions, and other unique considerations. After unprecedented fiscal and monetary policy, the economy bounced back after just two months.
Inflation is now clearly in focus and certainly less transitory than the Fed was expecting when the data first began accelerating last spring. That said, it’s quite dissimilar to 1970s-style stagflation which was characterized by high unemployment numbers combined with high inflation. A far cry from the dynamics of the labor market we are seeing today and what’s been dubbed the “Great Resignation.”
That said, inflation is beginning to influence demand. In 2020, we experienced a jarring shift from services to goods. This may soon be reversing and in fact the inflation adjusted numbers behind demand for goods is already showing the early signs. It’s unclear when and to what extent the beneficial offset in a rising demand for services will pick up.
Fed policy will play a large role in 2022. In addition to a higher pace in balance sheet tapering going forward, we’re likely to see a shrinking of the balance sheet. The market is already anticipating four rate hikes in 2022. Market performance can vary widely depending on the pace of the rate hike cycle. Historically, when done in a slow and steady fashion, the market does considerably well. In situations where hikes are steep and sudden, the market has struggled. This will be something to watch.
While there may be micro bubbles in the market, the current environment is actually quite distinctly different than that of the late 90s. That said, we are focusing on quality over strictly style based investment. This means investing in companies with strong balance sheets and good free cash flow, attractive earnings trends, pricing power and strong management teams.
We expect diversification and stock selection to continue to provide opportunities in 2022. We encourage clients to have conversations with their Advisors regarding current allocations relative to long-term strategic targets.
As always, we appreciate your confidence and support as we seek to build portfolios for the long run. If you or someone you know would benefit from speaking with a HoyleCohen Advisor, we encourage you to reach out.
Your Hosts:
Liz Ann Sonders
Chief Investment Strategist
Charles Schwab
As Managing Director and Chief Investment Strategist at Charles Schwab, Liz Ann has a range of investment strategy responsibilities, from market and economic analysis to investor education, all focused on the individual investor. She is a regular contributor to Schwab’s publications and videos, and the keynote speaker at many of the company’s corporate and client events, as well as outside conferences.
Liz Ann is regularly quoted in financial publications including The Wall Street Journal, The New York Times, Barron’s, and the Financial Times, and she appears as a regular guest on CNBC, Bloomberg, CNN, Yahoo! Finance and Fox Business News programs. Liz Ann has been named “Best Market Strategist” by Kiplinger’s Personal Finance and one of SmartMoney magazine’s “Power 30.” Barron’s has named her to their “100 Most Influential Women in Finance” list and Investment Advisor has included her on the “IA 25,” its list of the 25 most important people in and around the financial advisory profession.
In 1999, Liz Ann joined U.S. Trust—which was acquired by Schwab in 2000—as a managing director and member of its Investment Policy Committee. Previously, Liz Ann was a managing director and senior portfolio manager at Avatar Associates, an original division of the Zweig/Avatar Group.
Vanessa Wieliczko, CFA, CAIA, CFP®
Chief Investment Officer
HoyleCohen, LLC
Vanessa Wieliczko oversees the firm’s investment department and leads the Investment Committee. She joined HoyleCohen in 2008 and helped develop the firm’s CorePlus approach, a unique blend of traditional and alternative assets. Vanessa holds a Bachelor’s degree in business administration and management with a concentration in international finance from Boston University.
Driven in pursuit of excellence, Vanessa obtained her Chartered Financial Analyst, Chartered Alternative Investment Analyst, and Certified Financial Planner designations all before turning 30. Active in the community, Vanessa serves on the board as President of the CFA Society San Diego, a group of more than 500 investment professionals.
Disclosure:
HoyleCohen is a fiduciary acting on behalf of our clients. We are a fee-based investment advisor and do not receive commissions for any investment strategies of products that may be discussed. Today’s discussion was intended for informational purposes only. No decisions regarding investment strategies should be made based solely on this presentation and nothing shared today should be interpreted as investment advice. Any investment decisions should be discussed with your Advisor. Finally, all investments carry the risk of loss, including the permanent loss of principal and past performance is not a guarantee of future results.
