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Valuations Matter

The first-half of 2022 proved to be a challenging time for global financial markets. High inflation, rising interest rates, the ongoing conflict in Ukraine and persistent supply-chain challenges have acted as a myriad of headwinds for financial markets. Notable indexes for both risky assets (stocks) and less-risky assets (bonds) have suffered double-digit losses since the start of the year. On a relative basis, client portfolios have performed well and have continued to protect capital during the market weakness.

Much of the weakness seen thus far has come from stock market valuations being reset. The high-flying growth (ie. technology) stocks that reached unprecedented valuations during the pandemic were the first to fall near the start of the year…

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