July 2022 Market Update & Outlook

Hawaii has many beautiful places to see, and one of my favorites is Nuuanu Pali Lookout.?

It is a gorgeous view of the island of Oahu. But there is a tragic story behind this historic landmark.??

Pali means "cliff" in Hawaiian, and this was the site of the battle of Nuuanu in 1795, where King Kamehameha won the struggle that finally united Oahu under his rule.?

?Typically, it is an advantage in a battle to have the "high ground," but in this instance, the "high ground" literally ran out, ending in a sheer cliff.??

?Are you feeling a little like that as you navigate today's market? Like you did everything right, you have the "high ground" but, cash is being eroded by inflation, arguably by double digits; most bonds are far from keeping pace with inflation, and as the Federal Reserve raises rates, the likelihood that these bonds depreciate in value is high. Even though you have researched and have the "high ground" owning quality, profitable companies, the extreme fear in the market continues to push prices lower.??

While this note, as always, is not personal advice but rather broad general information and opinion, I will tell you that there are things that most investors can do to protect and grow their wealth even during times like these.??

• ?Where do we go from here?
• Is your plan still viable, and Have you adjusted your allocations to reflect your long-term goals??

?Where do we go from here??

?I still believe we are heading into the roaring 2020s, much like the roaring 1920s. I know it may not feel that way right now. However, despite what stares us in the face, those with a longer-term (five to ten years or more) have an excellent opportunity to invest right now.??

?Let's look at what we face over the next 18 to 24 months. (Warning, this may be painful to read.)

• ?Over three trillion dollars in wealth has disappeared from the markets since the downturn began, while prices have increased with essential supplies increasing the most.?
• Wages worldwide are not keeping up with price increases causing consumers to cut back on nonessential purchases.??
• Russia, to a large extent, holds the world hostage, driving food and energy inflation in Ukraine to over 15%, with follow-on impacts on Europe and the rest of the world.?
• Russia and Ukraine have traditionally supplied a quarter of the world's grain supply.?
• Natural gas and oil have traditionally been supplied by Russia to Europe, causing energy prices to spike by 72% in Germany alone.?
• GDP (Gross Domestic Product) for the United States has now likely declined for two quarters, indicating that a recession is underway and is only gathering momentum.?
• Supply chain issues persist, with many factories in China remaining idle during their latest COVID lockdown.?

As you can see in these few bullet points, this is a global issue, and the United States is faring far better than much of the rest of the world, despite how it may feel to those reading this note.??

?Natural gas is also a key component in fertilizer production, exacerbating the food supply issue further out, just as the destruction of farming equipment in Ukraine also indicates a longer-term food supply issue. Also, remember that oil is not just used for gas in our cars but is also a key component in plastics and rubber for the tires on our vehicles and equipment, to name a few things.??

?My point here is that the impacts of all that is going on are much farther reaching than many think.??

?From an investing and planning for the future standpoint, if you or your advisor have not adjusted your asset allocation over the past several years (not just several months), then you have felt more pain than necessary. If you or your advisor are not continuing to adjust to the changes or are overcorrecting, the pain will likely be more severe.??

?What tends to happen is an overcorrection due to the justified extreme fear—moving everything immediately to some other asset class.?

Invariably and in hindsight, this leads to more long-term pain than necessary. Instead, steady adjustments will lead to your best results over time.??

?Is your plan still viable, and Have you adjusted your allocations to reflect your long-term goals??

?For many people in the United States, the studies show that there is no real plan, but assuming you have a plan, Is it still viable given what is happening now??

?You should ask this question each year, if not each quarter.??

?Has your time horizon changed???

Are you more concerned now than before about your income stream???

Have you created your personal paycheck protection program, and will it be enough given the changes in inflation??

Is the timing of your cash flow appropriate, and does it minimize your tax liability??

Has something changed that requires an update to your estate planning??

Are you in a position to take on additional risk while others are fearful, thus potentially giving you a long-term advantage??

Are you in a position that has made you realize you have taken too much risk because your time horizon has changed, or is it more likely to change now than last year when you created your plan???

?If you are wondering how to adjust to an environment like the one we are in now. Please do not hesitate to reach out to us through social media, our website, a direct call, or email directly to me at [email protected]

?"Define your outcome and allow a skillful artisan to help create it for you."

?Nothing in this communication should be construed as personal advice, and past performance is no guarantee of future results. Investing is not appropriate for everyone. There is a risk of loss associated with investing in the markets. No representation or implication is being made that using any methodology or system will generate profits or ensure freedom from losses. Guardian Rock LLC and its affiliates are fiduciary investment advisors. Please consult with Guardian Rock or another experienced investment advisor before making investment decisions and trying to implement the strategies and tactics we discuss in any of our publications.