The month of January will go down as one of the most vicious on record for the general markets. As I had previously written regarding the 3 standard deviation move, at one point the S&P 500 was down more than 11%, with the NASDAQ falling more than 17%. Such volatility hasn’t been seen since the Covid lows and marks one of the worst starts of the year in several decades.

In hindsight, I am pleased with our moves of raising a bit of cash during the final week in December and reallocating a portion of this capital into what we viewed as a more defensive area, taking advantage of the steep value decline and commodity boom in the Emerging Markets. Thus far this year, this group has led most asset classes, albeit flat, throughout the month of January.

During periods of heightened uncertainty and what typically leads to increased volatility, we will always increase our communications such that no one should be left in the dark as to what we’re thinking or doing within our portfolios. We are getting great feedback on our video updates and if you haven’t yet caught them, please make some time to visit the educational page on our website HERE. As I mentioned before, education leads to objective thinking which allows us to take advantage of situations when others are panicking.

While not a single person knows what the future may hold, it is without question that markets will be quite a bit more difficult than years past. If nothing more than a less accommodating Federal Reserve, it seems as if the one common understanding among investors is that the proverbial ‘free lunch’ provided by never ending liquidity and 0% interest rates has come to an end.

What I find interesting however is just how quickly the market is pricing in a reversal of policy giving, in my opinion, far too much credit to the Federal Reserve for a new-found fiscally responsible approach to monetary policy. I do not hide the fact that I believe the Federal Reserve has 1 maybe 2 rate hikes at their disposal for 2022 and not the 5 or 6 being priced in. This alone keeps me quite optimistic regarding equities at their current levels and the idea of a much-improved February and March. That said, it is unclear just what will happen should we begin to witness military action beyond the current posturing of Russia on the border of Ukraine.

My view at the moment is that the market remains guilty until proven innocent and that a defensive posture will be key until we get a clearer picture of just what the future holds. Make no mistake however that this increased volatility has created unique opportunities which we will seek to capitalize on in the coming months. I am quite pleased with our current portfolio positioning and believe I have beaten the ‘allocation’ and ‘risk’ discussion to death. I’m confident that our clients are in appropriate allocations and understand market volatility so that we may act opportunistically when the time is right rather than emotionally or unobjective.

Going forward, it is my opinion that this market is at the mercy of inflation, more specifically, the data generated each month from the CPI report. Regardless of how this inflation transpired, the pressure for the Fed to act will remain high should we not see any relief in this area. If, however, we see supply chains improve and pricing subside, the Fed will not be under such intense pressure and therefore markets may breathe a collective sigh of relief. The picture at present is quite murky, which means we are subject to increased volatility on nearly a daily basis. The best way I’ve found to deal with such ups and downs is to simply take a step back, and seek a bigger picture view. Over the next several years I remain incredibly optimistic about our economy, innovation and ultimately the investment opportunities that will follow. In summary, I continue to see a bumpy road in the near term with a brighter future around the bend.

On the general housekeeping front, the conclusion of 2021 marked one of our best years in company history. After more than 20 years as an investment adviser, I am in awe to step back and realize we now service over 600 families all throughout the US with the privilege of caring for around $280MM in assets. To think about my start at 811 Corporate Drive with some of you believing in me way back then musters up quite a bit of emotion. Our team continues to grow, with Abby now entering her third year and Logan his second. I know you will agree that each of these additions has been a critical and wonderful step for us.

Over the years during each of our evolutionary growth steps, I have personally committed new capital for our expansion whether it be in the form of additional employees, increased technology, or even the purchase of an office building. Now, as we look to further our growth and continue servicing clients at the highest levels of care we’ve adhered to in the past, I’m honored to announce that someone is coming alongside of us to invest in the future of our firm.

While still in process, it looks as if sometime during Q1, Joule Financial will be partnering with Bluespring Wealth Partners, a subsidiary of Kestra Financial, a sizeable financial firm based in Austin, Texas. With our firm’s growth trajectory, we believe it is of critical importance to seek out a partnership which will allow us to further scale our operations. Bluespring will be taking an ownership position in Joule designed to continue our firm’s legacy for generations to come. It is surreal and wonderful for me as an entrepreneur to have someone willing to come alongside us and further the vision our team has been building over these last 20 years.

Nothing will change from a client’s perspective as all things, including our name, our team, custodian, method of business, investment strategy, etc. will remain the same. The only thing that will be altered is on our end, Bluespring will be handling much of our human resources, operations and administrative tasks going forward. I’m beyond excited about the partnership and look forward to the future. We will eventually have a form for all clients to sign acknowledging the change but that is still some time from now.

The year is young and with volatility on the rise I suspect there will be incredible opportunities as we remain patient. I will continue to come to you with updates as they unfold from the macro economic or geopolitical world. My guess is you’ll be hearing from us quite a bit this year.