Quarterly Client Letter – 4th Quarter 2022

The U. S. stock market enjoyed a nice recovery from its June low in the early part of the third quarter, only to reverse course and end the quarter at new lows for the year, after a rough September that saw the S&P 500 decline by more than 9%.  For the full quarter, the index was down roughly 5%, bringing year-to-date losses for the widely followed benchmark to about 24%. 

If stocks have seemed more volatile this year, it’s not your imagination.  Indeed, we have seen 35 daily moves of 2% or more in either direction so far this year, versus seven last year.  And as of this writing, the volatility continues, with the S&P 500 gaining over 5% in the first two trading days of October, reversing all the third quarter’s loss.

The damage this year has not been limited to the U.S., nor to stocks.  Indeed, international stocks are down 26%, bonds (as measured by the most widely followed index of U.S. bonds) are down 15% and even the venerable 10-year Treasury note is down 16%.  As a result, our most balanced accounts have not enjoyed the benefits we would normally expect from diversification.  A typical, conservative balanced account with 60% in stocks and 40% in bonds could easily be down 20% this year.  While we are seasoned to expect occasional bear markets in stocks, we expect better downside protection from our most conservatively positioned accounts. 

To put that in some perspective, by some measures this year has been the worst for a balanced portfolio in about 50 years, as you’d have to go back to the 1970s to find a year in which stocks and bonds were both down double-digits. 

And yet while the circumstances are unusual, there is no mystery as to the cause.  To combat rampant inflation, the Federal Reserve has undertaken an aggressive campaign of interest rate increases and signaled a commitment to continue doing so until inflation is under control.  As a result, the yield on the 10-year Treasury has jumped from about 1.5% at year-end to over 4% as stocks hit their low for the year.  And as stocks have recovered some in recent days, the yield on the 10-year settled back down to around 3.6%. 

We continue to believe the Fed is on the correct path and that getting inflation under control is, and should be, their primary objective.  The market may not like higher rates, but in the long run, stable prices and positive real interest rates are vital to a healthy and functioning economy. 

If you follow the prognostications of the financial media, you can find calls for everything from “the mother of all crashes” to the “buying opportunity of a lifetime.”  While we aren’t fans of such hyperbole, either could be right, at least directionally.  Perhaps more importantly, both could be right.  Meaning, if someone were to ask us, “Does this sell-off have further to go?  Or is it time to buy?”  The answer might be “yes” to both.  Yes there may be more downside.  And yes it’s probably a good time to buy.  Because we don’t know what stocks will do in the short run, or how markets will react to data in the coming months.  But we do know that buying stocks when they have come down in price as much as they have tends to produce good long-term results, even if you don’t pick the bottom. 

And while we know it is never fun to watch your account balances decline, we find some high-level perspective can be helpful.  It is worth remembering that we enjoyed some surprisingly good returns from stocks over the previous few years, well above long-term averages.  And yes, we have given up about two years of gains, but stock returns are still solidly positive over the past three and five years.  And we believe three-to-five years hence, you will be better off than you are today, and we continue to look for the investments that can provide those returns. 

SoundPath Investment Advisors

Eddie Carlisle     Doug Muenzenmay        Julius Ridgway



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Sissy Moreland

Client Services Trading

A graduate of Mississippi State University, Sissy joined Medley & Brown in 2017, but her career goes all the way back to 1990 when she was the merchandise director for four years at Phi Theta Kappa. She was also Customer Service Manager and Marketing Development Manager at Crystal Springs Apparel from 1994 to 2005. From 2005 to 2017, she was Manager of Sales Administration at Skyhawke Technologies. Thanks to her considerable operations and administrative experience, Sissy oversees trading and assists with most back-office operations for the firm. Staying so busy at work requires Sissy to recharge her batteries outside the office from time to time which she does by running, reading, enjoying a leisurely brunch, and watching the Saints play football.

Beth Braswell

Client Services Coordinator

Beth spent four years in the investment world before joining Medley & Brown in 2004 as our operations coordinator. She and her husband Robbie are busy parents to identical triplet daughters, so not surprisingly, some of Beth’s favorite things to do are napping and relaxing on the beach when she actually finds the time. Beth also enjoys taking short walks to the pool, attending concerts, and going out of town for long weekends. Beth loves her Mississippi State bulldogs and currently has four dogs, three cats, and three grandcats because having three children simply isn’t enough. No wonder her operational skills are so exceptional.

Doug Muenzenmay, CFA, CFP®

Senior Advisor   |   Principal

When he’s not enjoying the outdoors or attending his children’s school and sporting events, you can find Doug studiously researching investments for his clients. His career began in 1991 after graduating from the University of Iowa with a bachelor’s degree in economics. He spent 17 years in trust investments at three different banks before joining Medley & Brown in 2010. Doug also got his MBA from Mississippi College and served as an adjunct professor in finance there from 2007 to 2013. Married to his wife Sharon since 2001, Doug is a Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), and a board member of the CFA Society of Mississippi.

Eddie Carlisle, CFP®

Senior Advisor  |   Principal  |  Chief Compliance Officer

Eddie’s extensive education includes a B.S.B.A. in accounting, with special distinction, from Mississippi College in 1994, along with a J.D. from Vanderbilt University and LL.M. (Master of Laws) in taxation from the University of Florida. But it’s what he’s learned outside of school and work that really stands out. He’s an Eagle Scout, which taught him a great deal about honesty and hard work from an early age. He learned even more earning black belts in Taekwondo, Hapkido, and Hanmudo. Oh, and he studies the Korean language in his spare time as well. Additionally, Eddie serves as an adult leader for Scout Troop 164 in Madison. He is a past board member of Hope Hollow Ministries, the Central Mississippi Down Syndrome Society, and the Mississippi Corporate Counsel Association. Eddie is currently a board member of the Woodward Hines Education Foundation. He enjoys spending time with his wife, Sarah, and their three children—Andrew, Caroline, and Emma. 

Julius Ridgway

Senior Advisor   |   Principal

Judging from his background, you’d think investments and other financial matters were all Julius cares about. After all, he has two decades of direct investment experience and spent the previous ten years involved in banking and real estate. Julius also received a masters degree from the London School of Economics in 1998, an MBA from Millsaps College in 1993, and a history degree from the University of Mississippi in 1990. But his true passions include driving sports cars on racetracks or twisty mountain roads, running ultramarathons, and taking road trips with his wife and son. He’s worked here since 2002 as a Chartered Financial Analyst (CFA) and member of the CFA Institute while also serving as an adjunct instructor at Millsaps College and board member of New Stage Theatre. It takes major dedication to tackle all these responsibilities—sort of like training for all those long distant runs—but Julius enjoys every minute of the grind. And when it’s time to slow down, Julius finds the best way to clear his head is taking long hikes in the mountains on all those road trips.