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Daryl’s current thoughts on the market.

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May, 2022

I want to reach out to you to share some of my observations about the market since we have been enduring a period of volatility. First, the good news: the economy is strong, earnings reports are at or above projections, people are returning to their pre-pandemic lives, and there is strength in the U.S. labor market. Unemployment is low and wages continue to tick up. Despite a lot of drama, these are not dire economic times in the United States.

Uncertainty continues, however, as China’s supply-chain issues remain amid Covid-related lockdowns across the country. The war in the Ukraine combined with Russian sanctions are adding pressure to prices and dampening consumer confidence. Inflation is not helping, to say the least, and is affecting diverse sectors across the economy. Not surprisingly, the stock market is reflecting that instability.

That said, indicators suggest that the potential exists for inflation to subside over the next year and return to a more benign level, which the markets will like. The Federal Reserve will continue to walk the fine line between reducing stimulus without triggering a recession and will hopefully succeed. Should a recession occur, it will likely not be until late 2023 and may be mild.

Indicators of a severe downturn are not currently part of the U.S. economic landscape. Most companies I and my advisory team are interested in are posting solid earnings and have great growth prospects. The market seems to be bumping along at the bottom, forming a base, and that is normal technical action before it can begin trending upward.

As most of you know, we sold some positions and have had money sitting in money market funds in anticipation of just such a pullback. We are now starting to put that cash back to work in high quality names with excellent long-term prospects. The second half of the year looks like it will be a lot better than the first half. If you are close to or already in retirement, chances are that we have already had some serious discussions about how to mitigate risk in a downtrend. We utilize certain vehicles to protect against loss and stabilize retirement income. That work is done to smooth out the ride for a time just like this.

Shankland Financial offers a tool called “Riskalyze” to objectively evaluate the level of investment risk with which you are comfortable. It is conducted online and takes only about 10 minutes. Once you complete Riskalyze’s evaluation, it generates a score, or an investment “speed limit.” Depending upon how reliant you are on your portfolio to provide income throughout retirement, it could be very important to stay on top of your risk number and know that it may evolve over time. If you have completed a Riskalyze report in the past, this may be a good opportunity to retake the questionnaire and compare numbers.

You will receive in a separate email an individual, personalized link to the Riskalyze questionnaire. Please follow the instructions and complete the questionnaire. Once you receive your score, we can review and analyze how to adjust your investment strategy, if necessary, to best match your current risk tolerance level. Please see below for the contact information for our
Shankland Financial team members. Reach out to me, your advisor or another of our staff if you
need help navigating the Riskalyze site.

Thank you for allowing us to work with you on this journey of financial management and planning. Proper management and planning are good things, so to the extent you’re interested in assessing your own risk tolerance, please work with us through this evaluation and information gathering process.

Remember that markets go up over time. We like to prepare for rainy days when the sun is shining. The markets are neither as great as they seem at the top of the trend nor as bleak as they look when we are bottoming out in a pullback. We need to prepare for and manage both our emotions and our risk through all kinds of weather. We are here for you and appreciate your business and the relationship we have with you.

Daryl B. Shankland
Principal, Shankland Financial Advisors, LLC

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