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What Do I Own?

The answer to this question has never been more important. During the first quarter of 2022, we have witnessed several dramatic events that impacted financial markets, creating some of the most volatility on record.

Inflation surged to its highest level in four decades.

The price of oil surged, with oil futures reaching $130 per barrel.

Russia invaded Ukraine, aggravating already serious supply chain problems.

The Federal Reserve raised interest rates for the first time since 2018.

The yield on short-dated bonds rose above the yield on longer-term issues, a situation that is often a harbinger of recession.

During periods of uncertainty, stress, and volatility, it is important to review investment holdings and try to assess the impact of the changing environment. Both stocks and fixed-income securities have been and will be impacted.

Some companies and managements will be able to cope with change better than others. For our part, we try to own well-managed companies with good balance sheets and strong business franchises. We look for companies that provide products or services that are used and needed in all economic conditions. While all stocks will be affected by market volatility, well run essential businesses should provide good long-term returns.

During a period of inflation and rising interest rates, long-term bonds are toxic. Fixed-income securities are an important asset; they reduce portfolio risk and volatility, so we are keeping maturities short and quality high to reduce risk in a rising interest rate environment.

What you own in your portfolio is important, … that is the center of our focus.



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