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Vizionary Quarterly Report Q4 2022

A quick reminder to you our clients - your quarterly reports are available and can be viewed through your Client Portal.

How to Stay Ahead of the Curve in a Difficult Market

By Wayne Wagner Jr.

Happy New Year and—as far as the financial markets are concerned—good riddance, 2022. Last year was a challenge for the markets, to say the least. The S&P 500 posted one of the 10 worst years of the last century, down 19%, and the Nasdaq suffered losses of 33%. Meanwhile, the strong U.S. dollar generated downward pressure on non-U.S. stocks and global bond markets sold off as interest rates spiked. Few safe havens were to be had, and what safety there was fell prey to rising inflation and eroding purchasing power.

Get ready for a bumpy ride

As we enter 2023, expect a bit more of the same, with the Federal Reserve intent on getting inflation under control by selling assets off its balance sheet and continuing to raise interest rates. Remember, the Fed kept interest rates at zero for a very long time and propped markets up through the pandemic by printing trillions of dollars. Now, it’s time to pay the proverbial piper and that means challenging markets and falling asset prices for the foreseeable future. Bottom line: the worst of the market turmoil isn’t yet behind us.

There are precious few golden nuggets in the economic data. Labor is tight and associated costs keep rising. Costs are passed through to consumers in the form of higher prices. This is inflation, which I anticipate will remain well above the Fed’s annual target of 2% and may persist for quite some time.

The baby boomers are retiring, are we in trouble?

The labor shortage is demographic in nature, driven by 76 million baby boomers retiring and only 44 million Generation Xers to fill their shoes. The news isn’t all bad: 81 million millennials—those in their late 20s to early 40s—are standing by, but this group doesn’t have the gray hair and experience to best navigate the economy. At the same time, more than 12 million family-owned businesses will be passing from boomers to . . . well, someone—a prescription for economic disruption the likes of which we’ve never seen. Note my reference to “disruption” and not “destruction.” The landscape is changing fast and Fed bankers and regulators have a lot of work to do to accomplish a “smooth landing.” They may not have all the answers yet, but I imagine they’ll ultimately land this plane safely.

So what are we to do in the meantime? 

I’m reminded of a story about Boy Scouts, anacondas and the power of patience. Scouts are taught that anacondas eat their prey from the feet up (graphic, I know!), and should a scout find himself being swallowed whole by one of these giant snakes, he should wait (yes, wait) until his legs are fully engulfed and the reptile’s jaws are completely outstretched, at which point it’s time to cut off the beast’s head with a trusty Boy Scout knife. The takeaway: (1) don’t panic, (2) be very patient, and (3) have a plan to capitalize, all of which carry over to current-day investing.

Here's how we weathered the last downturn and how to prepare for the next one.

In March of 2020, we moved a large percentage of our clients’ conservative money into the stock market with a plan to keep buying should equities keep falling. In 4Q21, we sold off a high percentage of these positions and liquidated even more in 4Q22, leaving us highly weighted in cash, floating rate bonds, and fixed index annuities. Consequently, the impact last year of the downturn on our clients’ portfolios was a fraction of the losses realized by the broader market. That’s a testament to being patient while this “snake” continues its quest to eat us from the feet up. At some point soon, I expect there to be even more significant negative emotion in the economy and markets that’ll lead to falling stock and housing prices and likely some sort of debt crisis. That’s when we’ll wield our knives to “kill the beast” by buying once again, gradually at first. And when the worst of things begins to hit, we’ll buy even more aggressively with the dry powder on hand.

No matter the circumstances, we’ve never and will never run 100% to cash, nor would we run 100% to stocks. As of now, our feet remain firmly on the brakes in an effort to avoid collisions—not unlike driving down an icy highway, all the while avoiding cars careening around us. But just as ice thaws, so will the markets, and the time for optimism, and a shift to the gas pedal and more aggressive positioning, will certainly come. Until then, I preach patience and assure you,
we’ve got a plan.

Allow me to close by thanking you and all of our amazing clients, who place such trust in Vizionary. Sure, I’ve had a few rebalancing conversations with a select few, but I don’t recall a time last year when a client called panicked over losses. Instead, we’ve been given license to keep our eyes on intermediate- and longer-term outcomes and protect your near-term cash flow needs—this in order to prepare for your long-term goals of financial independence, philanthropy and estate planning.

Again, thank you for the opportunity to serve your family. Blessings for an amazing 2023.

Wayne Wagner Jr.

Advisory services offered through WealthPlan Group, a DBA for WealthPlan Investment Management, a subsidiary Registered Investment Advisor of WealthPlan Group, LLC. WealthPlan Group, LLC is not a registered investment advisor, but is the holding company for WealthPlan Partners LLC and WealthPlan Investment Management, LLC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which Investment(s) may be appropriate for you, consult your financial advisor prior to investing. Information is based on sources believed to be reliable, however, their accuracy or completeness cannot be guaranteed.

No investment strategy can assure success or completely protect against loss, given the volatility of all securities markets. Statements of forecast and trends are for informational purposes and are not guaranteed to occur in the future. All performance referenced is historical and is no guarantee of future results. Securities investing involves risk, including loss of principal. An investor cannot invest directly in an index.

The information in this communication applies solely to the intended audience and in no way amends, revokes, or otherwise alters the existing agreements and relationships between WPIM and its clients. This communication is not a binding offer, expressed or implied. WPIM undertakes no obligation to update or revise the information herein or in any referenced third-party resource due to new information, future events or circumstances, or otherwise.

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