In Michigan, the onset of wintery weather brings about a change in wardrobe. Instead of avoiding the outside world entirely, individuals bundle up accordingly. At Blue Chip Partners, we apply a similar approach to managing client allocations.
As underlying market factors change, we dress portfolios appropriately instead of foregoing participation altogether. Whether it is in anticipation of financial markets’ versions of sunshine and blue skies or seasonal precipitation, we maintain the belief that time in the market is more important than timing the market.
As we digest the state of the investment climate today, we have identified three key themes to watch in the first quarter of 2022 and beyond:
U.S. markets find themselves at a crossroads as we begin 2022. The staying power of inflationary pressure, shifts in monetary policy at the Federal Reserve and central banks around the world, and the ensuing impact on consumer activity and balance sheets have potential to impact the direction of travel from an economic perspective.
The dynamics that currently underpin financial markets have led some to question the return potential of assets for the first quarter of 2022 and beyond. Interest rates may rise, albeit modestly, and the margin debt that has contributed to equity market appreciation could be scaled back. Now is not the time to panic, but a more normal level of volatility should be expected.
A focus on quality serves as the backbone of Blue Chip Partners’ investment philosophy. Our approach is evergreen, but we also view increased scrutiny on allocations as prudent given elevated uncertainty as we enter Q1 2022. Health Care and pockets of Information Technology stand out as areas of interest.
View more Blue Chip Quarterly Edge updates here.
Expressions of opinion are as of 31 December 2021 and are subject to change without notice. Any information provided is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation to buy, hold or sell any security. There are limitations associated with the use of any method of securities analysis. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Every investor's situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that any statements, opinions or forecasts provided herein will prove to be correct. Dividends are not guaranteed and must be approved by the company Board of Directors. Indices are included for informational purposes only; investors cannot invest directly in any index.