Click here to download the Q1 ‘23 MoneyMatters brochure.

The year 2022 was a singularly difficult year for markets, the global economy, and investors. We saw negative returns in nearly all equities and fixed income categories, underscored by a significant reset in the crypto currency, technology, and growth stock sectors. Roehl & Yi has long termed this potential bubble as a ‘speculative frenzy’ – whereby investor appetite shifts greatly over time.

The past year marks what should be the end of the zero-interest rate experiment of the past 15 years. Thanks to inflation that ran as high as 9% in the spring, the Federal Reserve finally got off its hands to meaningfully raise interest rates, and the higher borrowing costs squashed enthusiasm for expensive investments with far-off profit hopes. It was a long time in coming and much paper wealth has been erased. Central banks around the world followed suit in what has been a global move back to basics.

Separately, the ongoing war in Ukraine, growing uncertainty around Taiwan, a still active COVID pandemic, and the usual political shenanigans add to the known risks for society and markets. Throw in recession and inflation and there is considerably more work to be done to restore balance and confidence for the future.

We have heard from many of you who are concerned about a potential recession. While some indicators, such as the labor market and well-capitalized banks, suggest economic strength, there are emerging pockets of weakness.

With budgets squeezed over the past year it is reasonable to expect faltering economic growth as consumers tighten their belts. At the same time there is a shortage of workers as early retirements and aging baby boomers have drawn down the pool of available workers. This strongly suggests businesses will need to “pay up” for good help; coupled with slowing sales, this points to a squeeze in profits. Roehl & Yi expects this double whammy of a likely recession and profit squeeze to put downward pressure on stock prices and economic activity generally, until we are on the other side of the transition to this new environment.

We are not, however, without bright spots. Inflation is coming down and eased in December 2022 for the sixth straight month. (Source: Wall Street Journal) Following this welcomed news, the yields on the US bond market are incredibly attractive as we discuss further in this market update.


Stock Market

The S&P 500 Index ended 2022 with a loss of 18.11%, giving back most gains realized in 2021. The Russell 1000 large-cap growth index lost 29.14% while the Russell 1000 large-cap value index only fell 7.54% as value significantly outperformed growth. On the upside, during the fourth quarter of 2022, all equity indexes experienced positive returns. The US bond market shed 13.01% for the year due to the marked rise in interest rates, while the stronger US dollar caused international bonds to suffer more significant losses at 18.26%. (Source: Morningstar)

The table below is an overview of market performance for 2022.

Market Leaders Shed Massive Gains

Familiar names such as Facebook, Amazon, Tesla, and Bitcoin, who recently attracted huge investments, have been brought back down to earth with 2022 losses of 64%, 49%, 65%, and 64% respectively. Cheaper value stocks significantly outperformed growth stocks as the end of ultra-cheap financing cured a speculative fever and squashed prices of many long-shot growth stories. History suggests that these cycles tend to last for years rather than months, as is expected as the economy continues transitioning to moderation in terms of borrowing, stimulus, and speculation.

The Bond Market

 2022 saw the Federal Reserve engineer the steepest increase in interest rates in modern times, the chief reason why both bonds and stocks suffered such material loss. Basic bond math holds that as rates rise the price of existing bonds must fall, but so long as they do not default then principal will be paid at maturity as promised. Unlike stocks, we should consider bond’s paper losses to be temporary since we’ll now be paid considerably more interest as compensation. This is unambiguously good news for our future portfolio income, and an important reason why we remain more constructive on high-quality bonds at these prices as compared to middling-priced stocks, all considered.

It is no doubt encouraging that investors who have typically sought the safety in bonds can feel some relief. Bonds, across the board, are now earning higher yields so investors may be able to anticipate better absolute performance and expect fixed income to look relatively more attractive versus equities, barring any severe market disruptions.



Inflation has moderated to 6.5% in December, down from 7.1% in November 2022 (Source: Wall Street Journal), though a 7% annual rate remains much higher than the Federal Reserve’s stated goal of 2%. Whether that is achievable in the short term will prove a challenge. Roehl & Yi expects inflation to continue to fall but anticipates a stickiness that may hover around 4-6%. If so, the economy will need to re-accustom itself to higher mortgage rates and steadily higher prices generally, which will take time. (Source: Blue River)

The chart below plots both the headline and core Consumer Price Index (CPI) over the past 11 months starting in January 2022, across sectors. Though we are not completely out of the woods, inflation has been moderating in the last few months. Core goods, energy, and food inflation have decreased significantly from earlier in the year as highlighted in green below. However, core services inflation remains above trend due to a tight labor market and is a concern for the Federal Reserve going forward. (Source: BLS, FactSet, J.P. Morgan Asset Management)


After months of deliberation, Congress passed the Securing a Strong Retirement Act of 2022 (SECURE ACT 2.0) on December 29, 2022.

All stakeholders including retirement plan trustees, retirement plan participants, retirees, and financial professionals now have certainty on what the bill contains and can begin planning for and implementing required changes.

Roehl & Yi has outlined several key provisions and how they may impact retirement plan sponsors and their participants. These provisions are organized by the calendar year they are scheduled to go into effect.  Click here to download our brochure.


Every storm eventually passes, and as difficult as last year’s results have been for multi-asset class investors, we believe the seeds are being sowed for stronger years ahead.

Consider these suggestions:

  • Be mindful of a potential recession and refrain from taking unnecessary risks or making emotional decisions.
  • Cash is more attractive with the Federal Reserve raising rates.
  • Consider Dollar Cost Averaging. Lower valuations can lead to higher future returns. A potential new bull market in stocks could be on the other side of a recession.


Roehl & Yi has made a commitment to delivering more value through enhanced client engagement, new educational videos, resource-filled emails, and more.

As always, we are grateful for your continued trust in Roehl & Yi, and we ask that your first phone call be to us if you have any questions or concerns about your investments. May you and your family experience happiness and good health.

This content is provided for informational purposes only. Nothing herein should be construed as the provision of personalized investment advice, nor should it be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without prior notice. Third-party data sources contained herein are for illustrative purposes only, are believed to be reliable, but we take no responsibility as to their accuracy. The newsletter contains certain forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially. As such, there is no guarantee that any views and opinions expressed herein will happen. The performance of active managers referenced in this article is not the performance of R&Y and nothing in this article is meant to show or imply any R&Y performance. The performance of active managers is presented as an illustration only and R&Y clients should not assume that their performance is similar. Investing involves risk of loss including loss of principal. Past investment performance is not a guarantee or predictor of future investment performance.  Any reference to the performance of securities of markets, indexes or specific investments is for illustrative purposes only and does not represent any of R&Y’s recommendations or performance.

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