Q3 2022 Quarterly Newsletter

There was no place for investors to hide this past quarter as the US Stock Market ended down 4.46%, with international developed stocks declining 9.20%, emerging markets stocks down 11.57% and the overall US bond market down 4.75%.  Meanwhile, inflation has remained stubbornly high despite the Fed raising interest rates at its most rapid pace since the 1980’s.

But I’ll stop with the doom and gloom…if you want more of that you have plenty of options out there.  Instead, I’ll focus on our financial planning and investment frameworks that act as the foundation to our financial lives. 

Financial Planning Framework

Our financial plans are built on 6 pillars (cash flow, income, investments, taxes, insurance and estate planning) that act as the foundation from which we make decisions.  This framework guides us during turbulent times and helps us focus on what we can control when the world goes haywire. 

Our plans are intentionally designed to account for economic turmoil with specific strategies for the various risks that we face throughout our lives.  We rely on diversification (in our investments, income and even insurance) to reduce risk.  Finally, we use a long-term view when assessing our investments, taxes and accumulation strategies, knowing that anything can happen in 6-12 months, but long-term results are what matter in the end.

For more detail on some of the principles in our financial planning framework, read our May 2022 Market Update.

Investment Framework

Humans make decisions based on emotions, not logic, and as a result are terrible investors.  We must have a clear and defined investment framework to rely on during market turmoil or we risk letting fear guide our decisions.

Our portfolios are built with 5 key common factors…(1) global diversification, (2) modest small/value tilt (3) short and high-quality bonds (4) institutionally managed asset class strategies and (5) minimal expenses and tax.  We rely on decades of academic research to base portfolio decisions on evidence, not fear.

For more detail on these factors and how we incorporate them into our portfolios, read our Q1 2022 Quarterly Newsletter.

In closing

We aim to use these frameworks to guide our decisions through these turbulent times and to limit the emotions that can derail even the best laid plans.