During the first week of January, the Investment Committee at Fortress met and laid out our 2022 Economic Outlook which would guide our investment decisions for the year. The essence of that outlook is that we expect U.S. stocks to continue to outperform albeit in an environment of heightened volatility. While we continually make adjustments to the tilt of growth-vs-value and large-vs-small, as well as changes to individual holdings, our overall tenor remains bullish for the year.
When Russia fully invaded Ukraine yesterday (as we were all preparing for our workday) U.S. markets signaled an extreme sell-off. As the markets opened, they did sell-off with all major indices hitting 2022 lows. Technically our markets, which had already been in correction territory, hit levels that might indicate even larger declines. But in one of the strangest days we’ve ever witnessed, the markets went from down almost 3% to end up 2-3%. This reversal also pushed the aforementioned technical indicators from a bearish signal to a bullish signal indicating support for the next leg up.
What have we done?
While we do think there is more upside, we have raised some cash, sold some volatile investments, and added some defensive investments. This is true for the majority of our mutual fund/ETF portfolios.
What do we expect?
We think that there will be a lot more volatility given what’s happening in the world as well as the Fed’s decision to raise interest rates and ongoing supply chain issues. However, and despite the volatility, we still expect stock prices to rise. We want you to know that our investment process has served us well for more than two decades and we’ve managed successfully through the Dotcom Bubble, 9/11, and the Great Recession. And while the events of today are a little different, our playbook is the same—we seek to protect and grow your capital in a prudent way so that you can achieve your long-term goals. That mantra never changes. We appreciate your trust in us but we also understand your concerns and don’t want to minimize them. If you have any questions please give us a call or send us an email and we will respond right away.