INSIGHTS

July 12, 2022

Market Outlook

Second Quarter 2022

Until we advance into the next expansion, the importance of adhering to timetested investing principles cannot be overstated.

A 1970s-style inflation shock and aggressive Fed tightening pressured first-half returns across most asset classes. World economies, stocks, and bonds struggled as the excess liquidity injected into the economy during the pandemic continued to drain from the system.

Doubling down on first-quarter losses, the S&P 500 fell again in the second quarter, dipping into bear market territory and marking the worst first half since 1970 for the index. Within the US, every stock sector, style and size experienced losses during the quarter. Most of the destruction over the past six months was due to price-to-earnings (P/E) ratio compression—an overall reset of the stock market’s valuation downward to account for a new investment backdrop with a higher cost of credit.

Defensively oriented sectors performed best during the quarter, including Health Care, Consumer Staples, and Utilities, while cyclical sectors performed the worst. Energy remains the only sector in the black for the first half of the year—a beneficiary of extreme supply and demand imbalance. Central bank tightening, the war in Europe, and China’s lockdown created economic uncertainty that led to investment losses across international markets as well.

Disclosures:

Tandem Wealth Advisors LLC (“Tandem”) is an SEC-registered investment adviser. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC.

The information published herein is provided for informational purposes only and does not constitute an offer of investment advisory services. All information is subject to change without notice. Nothing contained herein constitutes financial, legal, tax, or other advice. No investment process is free of risk, and investors may lose all their investments. Diversification and asset allocation do not ensure a profit or guarantee against loss. Past performance is not indicative of current or future performance and is not a guarantee. The opinions expressed in this video may not fit your risk and return preferences.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Nothing contained herein may be relied upon as a guarantee, promise, assurance, or a representation of future events or conditions. Tandem does not assume any duty to update any of the information.

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The Certified Financial Planner™ and CFP® (collectively, the “CFP® marks”) are professional certification marks granted in the United States by Certified Financial Planner Board of Standards, Inc. (“CFP® Board”). The CFP® certification is a voluntary certification; no federal or state law or regulation requires financial planners to hold CFP® certification. The CFP® is recognized in the United States and a number of other countries for its (1) high standard of professional education; (2) stringent code of conduct and standards of practice; and (3) ethical requirements that govern professional engagements with clients. To earn the credential, each CFP® candidate must have a bachelor’s degree (or higher) from an accredited college or university and three years of full-time personal financial planning experience. In addition, candidates must take the CFP® Certification examination and complete a CFP® -board registered program or hold an accepted designation, degree, or license. Every two years, CFP® certificate holders must complete a minimum of 30 hours of continuing education. More information regarding the CFP® is available at http://www.cfp.net.

Chartered Financial

Analyst The Chartered Financial Analyst (CFA) charter is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute—the largest global association of investment professionals. There are currently more than 107,000 CFA charterholders working in 135 countries. To earn the CFA charter, candidates must: 1) pass three sequential, six-hour examinations; 2) have at least four years of qualified professional investment experience; 3) join CFA Institute as members; and 4) commit to abide by, and annually reaffirm, their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct.