MacNicol’s Quarterly Commentary – July 2022


With this commentary, we plan to communicate with you every month about our thoughts on the markets, some snapshots of metrics, a section on behavioral investing, and finally an update on MacNicol & Associates Asset Management (MAAM). We hope you enjoy this information, and it allows you to better understand what we see going on in the marketplace.

“The only useful thing banks have invented in 20 years is the ATM.”
– US Fed Chair Paul Volcker


No love lost…

We love a good macroeconomic narrative; the trouble is there isn’t one right now. The first half of 2022 is one that most investors would rather forget. Our investment stance over the past 12-months has been cautious and consistent with our view that inflation is pummeling consumers and businesses. Higher prices are a huge problem, and financial markets worry about whether policy makers can reign in what is now runaway inflation. The impact of higher inflation and higher rates was relentless and took no prisoners during the first half of the year. Fixed income investors experienced the reality of noticeable reductions in the capital of various bond funds and partnerships. The first half was also dreadful for stocks, which careened lower and paused just long enough in May to set up for further losses as the second quarter ended. Experienced investors underestimated fixed income position volatility while newer investors have now given up the gains they made in the stock market from November 2020 until August 2021.

More broadly, 2022 has not been a good year for the traditional “balanced” investor, passive indexers, or growth investors but there was some budding good news as the first half ended. Investors are doing a good job of resisting the urge to sell, which is a good thing. Based on certain metrics, the market is – if anything – cheap. For instance, the percentage of stocks on the NASDAQ above the 200-day moving average has dipped below 15%. The NYSE is roughly as cheap; it dipped below 16% recently. The stock market last washed out like this 2008, but rewarded investors who stayed put or snapped up bargains.

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The Quarterly Commentary July 2022