Following three years of double-digit returns in the equity markets, 2022 was a year of price consolidation. The market correction that began in early January has been steep. Bear markets typically last one to two years and are usually the result of higher than average uncertainty in the economic and geopolitical climate. While periods like this are, in the short run, more challenging than up years, they do not present uncharted territory for our team, which has navigated these markets over many decades.
The programs put in place by the federal government in early 2020 to aid an economy that had stopped abruptly clearly needed to be adjusted in 2022. Price inflation, the result of too much money chasing too few goods and services, has long-term detrimental effects that cannot be tolerated. We are presently in an uncertain period, with both clear evidence the adjustments are working and still more work to be done. While disrupted supply chains and rapidly rising commodity prices have stabilized, critical areas like the prices of housing and wages remain high.
As always, we will closely monitor any changes in policy and economic conditions in the short and medium term. We will do this while remaining focused on our long-term investment philosophy of creating for our clients bespoke portfolios of what we believe are some of the best- run companies.
While last year was extremely difficult for growth stocks, the value-oriented names in our portfolios performed relatively well. As markets regain confidence and begin to move forward, our results should benefit from an increased investor appetite for the growthier names in our portfolio that have performed so well for us for many years. Where needed, we have realized gains by selling portions of our clients’ original investments in those positions from time to time as we attempt to manage portfolio risk.
Each client’s financial life is never a straight line. At Kimelman & Baird, we pride ourselves on being there for our clients in both fruitful and more challenging times. The year 2022 was clearly the latter, but we look forward to 2023 and beyond.
On a personal note, we congratulate our partner Yasmeen Mock, who completed her 20th year at Kimelman & Baird in 2022. She joins our partner Sapan Vyas, who reached that milestone in 2021.
We encourage you to visit our website, kimelmanbaird.com, and follow us on LinkedIn, Instagram, and Facebook, where we share with our clients and the world our rich 56-year history, mission, and relevant content.