Published On: December 27, 2022

Written by: Ben Atwater and Matt Malick

This has been a historically difficult year for financial markets. While the severity of the decline in equity prices has thus far been modest compared to some bear markets, the fact that both stocks and bonds dropped in tandem has made 2022 especially challenging. As financial advisors and investment managers, market turmoil provides an added incentive to reflect on our work.

Although losses have been impossible to avoid, we are nonetheless pleased by how we have done for clients. On the equity side, our focus on established businesses that generate strong free cash flows helped us avoid the speculative investments that have been the hardest hit this year. And our approach to laddering high-quality individual bonds has dulled the pain of rapidly rising interest rates.

As entrepreneurs we have a strong financial and personal link to the work we do. After all, we work directly for you. We do not have a bureaucratic “safety net” insulating us from our decisions.

Instead we are partners with you. We must put your interests first and we must advocate for you.

The most important way we do this is to maintain an investment discipline and execute on it. The systematic, individually managed, account-by-account approach we take to stewarding client money has been of great benefit in this year of turmoil.

We have addressed market volatility around each client’s specific needs. This might sound like common sense, but too often the tail wags the dog and organizations simply cannot help putting their priorities ahead of clients’ priorities.

Our customization extends to Wealth Management, which allows us to continuously learn more about your needs and goals while seamlessly integrating your investments with your financial plan. This synchrony is unique and is only possible because we individually manage accounts.

We think an entrepreneur-run firm is the best structure to align our interests. We believe bureaucracy is the enemy of effective client advice and asset management. We place our responsibility as your advocates above any other priority.

The returns that markets offered in 2022 were dismal, but when coupled with a consistent and disciplined approach, not devastating.

If we were part of a bureaucracy we would be linking you to an obligatory 2023 “Capital Markets Outlook” slideshow in this email.

But nobody knows what 2023 will bring and therein lies the effectiveness of our approach. We follow our discipline and markets do what they do. The more you try to outwit markets, the more damage you do.

Instead we approach 2023 with the optimism necessary to push on and with the promise that we will execute our investment approach with you top of mind.

Thank you for your trust and support during a topsy turvy year. We wish you all the best for a terrific holiday season, a Merry Christmas and a Happy New Year.

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