Market Commentary for Q1: What Every Investor Needs to Know

If you’re concerned about your investments and the current market conditions for early 2022, you aren’t alone. The best way to avoid making costly financial mistakes is to understand what’s going on and the underlying factors at play. 

In this post (and video below), we hope to put things in perspective with our market commentary for Q1.  

Before we dive in, let’s back it up and look at Q4 2021. 

Q4 was pretty extraordinary – with the S&P 500 finishing Q4 up 11% despite learning about the new variant and concern with the Fed raising interest rates.

When the Federal Open Market Committee (FOMC) meeting minutes came out, some people deemed the Fed more hawkish than the meeting itself – the concern was the Fed might raise interest rates faster and more times over the next year or two. 

This concern caused the market to come off in terms of valuation. Generally speaking, higher interest rates mean lower valuations over time. 

That being said, higher interest rates and inflation are typically not harmful to the stock market over time – until they reach a level that starts to affect economic activity. 

But we are not seeing that right now. 

The economy still looks strong. Corporate earnings growth still looks strong as well. 

The broader concern is not the S&P 500 or the Dow Jones where you have older, more cyclical stocks encompassed in those indices.

The bigger concern is growth.

market commentary Q1

When interest rates go up, companies that are priced based on future revenue growth have to discount that earnings growth back in today’s dollars at higher interest rates, which typically means that valuations have to come down.

If a company’s earnings are growing dramatically, then they grow into that lower valuation. 

In other words, lower valuation does not necessarily have to mean lower prices over time

If you are invested for more moderate or aggressive growth, you are going to have occasional drawdowns and underperformance. 

However, longer term, it has been proven historically that if you take more risk, you typically receive bigger returns over time. 

Check out the video as Mark Sorensen, our Chief Investment Officer, provides a deep dive into Q1 and explains what you need to be aware of in the coming weeks.

Going forward in Q1, we still believe the underlying fundamentals of the market are sound and economic recovery is still in play. 

And we think technology – though out of favor right now due to the concern of higher interest rates in the short term – will rebound and continue to be part of market leadership going forward.

Yes, we will see a little pullback, but we think patience will be rewarded in time. 

During times like this, you have to avoid making emotional decisions.

Remember, opportunity cost is the biggest risk to performance over time. 

Opportunity cost is the loss of growth that happens when investors make emotional decisions and move to the sidelines. 

We think this, like many other times in the last several years, is a time to be patient – and that will be rewarded. 

We believe stocks are simply on sale at the moment. So be patient.

About 401(k) Maneuver

401(k) Maneuver provides independent, professional account management to help employees, just like you, grow and protect their 401(k) accounts.

Our goal is to increase your account performance over time, manage downside risk to minimize losses, and reduce fees that are hurting your retirement account performance. 

We will review and rebalance your account for you with the goal in mind of keeping you in what is working and out of what is not. 

With 401(k) Maneuver, you can go about your life doing what you love with confidence, knowing we are managing your 401(k) for you. 

See how it works.

Have questions or concerns about your 401(k) performance? Click below to book a complimentary 15-minute call with one of our advisors today. 

Book a 401(k) Strategy Session

0 0 votes
Article Rating

401(k) Maneuver™ is offered by Royal Fund Management, LLC, which is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Royal Fund Management, LLC, is not affiliated with or endorsed by NASDAQ.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio. There are no assurances that a client’s portfolio will match or outperform any particular benchmark. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. Projections are based on assumptions that may not come to pass.

Images and photographs are included for the sole purpose of visually enhancing the website. None of them are photographs of current or former clients. They should not be construed as an endorsement or testimonial from any of the persons in the photograph.

All third-party trademarks, including logos and icons, referenced in this website and our content, are the property of their respective owners. Unless otherwise indicated, the use of third-party trademarks herein does not imply or indicate any relationship, sponsorship, or endorsement between 401(k) Maneuver and the owners of those trademarks. Any reference inside this website or content to third-party trademarks is to identify the corresponding third-party goods and/or services.

Would love your thoughts, please comment.x

Select a Date from the Calendar below


Select a Date from the Calendar below


Have questions? Need help?

Book Your Complimentary

15-Minute 401(k) Strategy Session


Looking for tips that might maximize your retirement
savings and help you be a better steward of your money?

Subscribe to our 401(k) Blog

The go-to-source for your retirement investing and saving tips

5 401(k) Accounts Mistakes that May Negatively Affect Retirement Income

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

Why Account Balancing & Allocation May Affect 401(k) Performance

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

The 5 Top Costly 401(k) Rollover Pitfalls

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

Make the Best Decision for Retirement:
Understanding the Different Types of
Financial Advisor Licenses

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

How Popular Advice On Target Date Funds May Be
Working To Undermine Your 401(k) Retirement Savings

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.

3 Things That May Supercharge Your Future
401K Performance...Even In a Down Economy

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.