Market Update 2/24/2022
As you know, Russia launched an assault on Ukraine targeting military infrastructure and landing troops throughout the country. Russian President Putin said a full invasion and occupation is not the objective. Most analysts believe his goal is to de-stabilize the the pro-western government and to degrade the Ukrainian military.
We believe that a market sell-off of 5% or so is expected on this. The risk right now is in the energy space. Energy prices will likely rise putting a headwind on growth. This attack will NOT change the Fed delaying rate hikes as this will make inflation worse. Slow growth, inflation, and a tightening Fed are not generally good for stocks.
Despite all of this news, we believe the market decline of about 15% now warrants a slight buying opportunity for long-term investors. This is only for clients who want to add money to an account or make a large pension contribution this week. This is a “decent” entry point. Why? Earnings on the S&P500 for the year 2023 are expected to be about $235 share and with the index trading at about 4,200, this gives us a forward earnings yield of 5.6%. This is about right in our view.
Our office will still NOT be doing any tactical rebalancing today. We expect a lot of volatility this year with more entry points along the way. We expected the market to “take a pause” in 2022 due to the Federal reserve rate hikes, the pandemic that does not want to end, the Presidential election cycle, and non-economic events such as Russia/Ukraine. We still do not want to change existing portfolios at the moment even though you can add to accounts now.
Take comfort in knowing that your income will not likely change, you have probably paid off your home, and you have many investments to protect the downside.
Our entire practice is built for trying to defend you in these bad scenarios.
Please contact us with any questions and please pray for the people in Eastern Europe.
Jack Oujo, CPA/PFS, CFP®, CSA, MS (Taxation)
Oujo Wealth Strategies
1540 Highway 138, Suite 106, Wall, NJ 07719
908-675-5571 – Cell
Jack Oujo – Financial Advisor
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