A Message for the New Year from Bartholomew & Company

January 10, 2023

It has been said that days go by slowly, and years go quickly; however, the year 2022 made that statement feel quite a bit different. There were times when it felt as though the year might never end. Now that it has, we wanted to take some time to recount, reflect, and reaffirm our strategy to you, our valued clients.

As 2022 began to unfold, we were gleefully reflecting upon overly successful market performance from 2021. The US economy appeared to be recovering from the COVID-19 disorder. Little did anyone know what was about to take place on so many stages all at the same time.

First, as he was being hosted by Chinese President Xi Jinping in his luxury suites during the 2022 Olympics in Beijing, Vladimir Putin was preparing to unleash a fierce, devastating, and persistent military assault on his largely underprepared neighbors in Ukraine. The impact was, and continues to be, devastating both on a humanitarian and economic level.

Second, the Federal Reserve’s concern about the potential effects of wide-based and rampant inflation led them to aggressively raise interest rates to slow down the domestic economy. This defensive strategy caused investor confidence to erode quickly causing equity and bond markets to have sharp price declines all while inflation stayed stubbornly elevated.

It had become apparent that our economy needed a strong dose of economic medicine to fend off the effects of inflation. Not unlike other diseases, if inflation is left untreated it can be damaging, or even lethal, to a nation’s economy.

Where did this inflation come from and why has it been so high?

The Fed created inflationary problems out of necessity: through policies they established in the first quarter of 2019, they were able to save the economy from the potentially shocking effects of the pandemic.

Now, it is the task of the Fed to get back to some levels of normalcy. The Fed’s indication to ease off the pace of interest rate increases presented itself late in the 2022 calendar year at which point the market was afforded a brief respite heading into a confusing and still uncertain 2023.

Lastly, the COVID response by the Chinese government and the poor performance of their domestically manufactured vaccines caused China to lockdown its citizenry for extended periods. This caused a broad shock to global markets and produced excessively high levels of market volatility, causing concern for US business earnings.

This year was challenging, but we have continued to remain resilient.

From an investment perspective, we know that we must focus on the long-term results. It has been a unique challenge this past year to remind clients of this enormously true principle. Discipline is always imperative, but especially in times of uncertainty.

Discipline, however, does not mean stagnation. Change is the only certainty in this world. In the investment world specifically, change happens quickly and drastically. Our team thrives on changes, the opportunities they bring, and navigating the ways we can adapt on behalf of our clients.

The S&P 500 can start the day down 300 points on one scrap of bad data and end the day up 500 points on one glimmer of good news. In 2022, our team spent countless hours watching, researching, and discussing the market, economic, and geopolitical landscape.

2023 will be no different. We will continue to make new investment decisions as market conditions evolve and allow us new opportunities. At the same time, we will stay the course in difficult times when emotion could interfere negatively with judgement. You can have faith that all decisions are based in prudent discipline, thorough research, and with our clients top of mind. Our value add is to remain focused and calm while others are not.

We are so grateful that you have entrusted our team here at Bartholomew & Company, and we look forward to what the new year brings. We promise to remain diligently focused on your financial goals and will continue to serve you with pride.

We wish you and your families a safe, healthy, and rewarding 2023.