Ingram's June 2022

Again, as Mayabb notes, discipline is vital. “Technology, consumer discretion- ary, and communication service stocks have been leading performers formuch of the past decade,” she said. “Many investors have allowed these sectors to become overemphasized in their portfolio, believing that their histor ical outperformance would continue. We have seen valuations correct sig nificantly in these sectors and as a re sult, they have suffered greater losses than other parts of the market.” GENERATIONAL MESSAGING Baby Boomers, as a group, have been lumped together since the first one showed up in January 1946. In current wealth management, that age cohort comes in three sub-groups: those who have already retired, those who are on the cusp of it, and those who still have the better part of a de cade before their full retirement age of 67. But there’s a difference between a retirement horizon and a lifetime investment horizon, wealth managers say. Longer life spans—notwithstand ing the actuarial blip imposed by the pandemic—requires retirees to ac cept levels of risk. Therefore, hitting that magical full retirement age today doesn’t hold the significance it used to. “Historically, and this dates all the way to back to defined-benefit pen sions, if you had a fixed income and Social Security, the idea was that all risk was off the table,” said Boswell. “Those days are long gone.” Virtually every portfolio manager worth a hoot will tell clients the same thing: Long-term strategy matters. Asset allocation matters. Calm in the face of perceived calamity matters. “Typically, the correct portfolio you had before the crisis is going to be the correct one to get you out of the crisis,” Battmer said. “What older investors are grappling with now is a fixed-income market that’s been chal lenging in a way no one has ever seen for 40-plus years.” That’s much more pronounced for Boomers, he says, both those already in retirement and those nearing it,

The private debt marketplace, Williams says, “is an attractive invest ment option for investors looking for yield. The yields are generally in the 8-10 percent range, and the floating rate structure tied to short-term inter est rates means that as the Fed con tinues to raise rates, we would expect the income from these funds to move up in lockstep.” Beyond traditional dividend equi ties, Richter says, alternative credit, floating-rate structured credit, di rect-origination municipal bonds are worth exploring. And, “for those who understand the strategies, certain options strategies can be beneficial during periods of volatility. Real es tate has always been there tradition

who tend to have larger concentra tions of “safe” assets needed for fixed incomes. “To see double-digit losses is a great departure from what any one has experienced over the past 40 years, and that increases the like lihood of people panicking: ‘My safe investments are not even safe.’’ At that point, wealth managers caution, its vital that investors avoid poor decisions made on an emotional basis, where fear, not fundamentals, is driving decision-making. “Stick to the plan and don’t panic,” Williams advises. No matter where an investor is with time horizons, the messaging remains the same, he said—develop a plan and stay disci plined to the plan. “The plan is what

“Frankly, people who still subscribe to the idea of living on yield are on a fool’s errand, Focus on total return.” — SCOTT BOSWELL, WEST REGION PRESIDENT, COM MERCE TRUST CO.

ally, but with the environment we’re in now, one needs to be very careful with sectors and regions where they are investing.”

differs between the groups, but the message remains the same,” Williams said. “The good news about every his torical bear market or correction is they have been followed by a recov ery. This, too, shall pass and it’s just a matter of how long will it take.” WHITHER YIELD? As with the energy appeal noted previously, wealth managers have some succinct advice for those who would attempt to jump that train after a 10-fold increase in oil prices since the early days of the pandemic: Don’t do it. And if you do, be darn selective. “Frankly, people who still sub scribe to the idea of living on yield are on a fool’s errand,” Boswell says. “Focus on total return. Investors who stretch for yield, buying bonds out past 10 years, every 1 percent move in rates costs them 10 percent in the val ue of those bonds.” More than, even: What will infla tion have done to the value of those bonds by then?

DOWN THE ROAD

So will the back half of 2022 pro duce similar anguish? “It’s a tough call looking at that crystal ball, clouded with many fac tors,” Richter says. Among them: “How inflation might unwind with the Fed’s response. It looks like COVID is gradually getting behind, us with China starting to reopen from zero-COVID. But our view is that vol atility is going to continue this year. We very well may go lower as we go through the summer periods, with lower trading volumes an overarch ing negative sentiments across many areas.” But, he says, hopefully: “We don’t feel recession is imminent,” even though the risk of a pullback may in crease in 2023.

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Kansas City’s Business Media

June 2022