Q3 2022 Market Review

Q3 of 2022 continued the rough start we saw in the first half of the year as the Federal Reserve’s war on inflation, Ukraine’s war against Russian aggression, and recession fears all increased in their intensity. Despite a bear market rally that peaked in August, major indices such at the NASDAQ and S&P 500 ended the quarter at or below the lows we saw in June of this year. To add insult to injury, bond markets also were in the red. Q3 marked the third consecutive quarter of negative returns in stocks and bonds, which has only happened about 9% of the time over the past 40 years.

What Now?

Barring a major rally today, both the US stock market (as represented by the Russell 3000 Index) and bond market (Bloomberg U.S. Aggregate Bond Index) will log their third consecutive quarter of negative returns. If that seems unusual, you are correct. In fact, from March 1979 - March 2022, less than one out of ten quarters (14/173) have experienced negative returns from both US Stocks and US Bonds.

Half Full or Half Empty - Stock Picking Still Loses, Value Still Wins

“Almost Half of Stock Pickers Beat the Market in Early 2022 Selloff” read the WSJ News Exclusive headline on Thursday 9/15/22. The story goes on to explain that this year’s middling performance is the best year for active stock pickers since 2009!

For ATX Portfolio Advisors® clients and Accountable Update readers, that probably is no surprise. In fact, as I pointed out in an April 2019 Accountable Update titled “Mutual Fund Landscape”, there are normally fewer than 25% of actively managed funds that tend to survive and outperform their benchmarks.

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