As 2022 comes to a close and we begin the new year, the major themes affecting the financial markets stayed the same. Rising inflation, the war in Ukraine and market volatility all remain on our minds. While we all attempt to navigate the uncertain environment, I wanted to thank you for the trust you placed in Pegasus. We wish you a happy and healthy new year and please reach out with any questions or concerns that may arise.
By, Jaysen Bohrod, CFA
The S&P 500 officially closed 2022 down 18.1%, the worst annual return since 2008, but up 5.89% for the last quarter. The Dow Jones Industrial Average outperformed by a wide margin, finishing with a -6.9% return. The Russell 2000, which mainly consists of small cap stocks, finished with a –21.56% return. U.S. Treasuries also declined by 15.1%, showing there wasn't anywhere to hide.
Interest rates continue to rise as the Federal Reserve works to fight rising inflation while hoping to minimize the weakening effects on the overall economy. The 2-year US treasury rate rose to 4.428% and the 10-year Treasury rate rose to 3.879%, closing the year, still inverted, with a spread of .549%. This means that investors are more unsure about the longer term than the short term and can be an indicator of an upcoming recession.
After a brief rally through November, oil prices for the quarter finished where they started, $80 per barrel. For 2022, we saw a high of $120 per barrel, due to the ongoing war in Ukraine, sanctions on Russia and OPEC supply constraints.
Gold, which is often used as a hedge against inflation finished the year flat at $1,826 per ounce but saw a strong 9% return in the fourth quarter.
In the third quarter, we saw the real gross domestic product (GDP) increase at an annualized rate of 3.2%, ending the trend of two consecutive negative quarters.
Investor uncertainty is expected to continue through the year as inflation remains at historically elevated levels, China is slow to re-open and the war in Ukraine cause elevated energy prices to persist.
With the passage of the $1.7 trillion omnibus bill, there are new rules and provisions regarding retirement accounts. A few are highlighted below:
Annually review and update your account beneficiaries to confirm accuracy. Especially after major life events such as marriage, divorce, death, or having a baby. The new SECURE Act rules can affect Trusts as beneficiaries. Be sure to review your Trust with your Estate attorney.
To update your beneficiaries online, go to:
Click the ‘Service’ tab
Click the ‘My Profile’ tab
Click the ‘Beneficiaries’ tab
For a copy of your 1099 tax form go to:
Click the ‘Accounts’ tab
Click the ‘Statements’ tab
Click the ‘1099 Tax Form’
The stock market, bond market and/or our office will be closed on the following days:
January 2, 2023 - New Year’s Day Observed
January 16, 2023 - Martin Luther King Jr. Day
February 20, 2023 - Washington’s Birthday
April 7, 2023 - Good Friday
Schwab Mobile App
Secure, online access to your accounts is easy, visit the Schwab Alliance website or Schwab Mobile App to view account balances & transactions, access tax documents, open new accounts, and more.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Pegasus Asset Management, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Pegasus Asset Management, Inc.. Please remember to contact Pegasus Asset Management, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. Pegasus Asset Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of Pegasus Asset Management, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.