Tenzing pacific services

Market Update for May
If you go down in the woods today ...

Market Update Craig MCavinue

“Market panics can create great prices for good companies and good prices for great companies.”

Benjamin Graham

Stock and currency markets performance.

May has come and gone. Mixed amongst the negativity are some positive results:

May Stock Performance
May Stock Performance

Data table is from Google Finance

On the currencies markets, the USD, which has held strong so far in 2022, gave back some ground against most major currencies in May:

May Currency Performance. 1
May Currency Performance. 1

Data table is from Google Finance

So the landscape seems a little more calm than last month.  This is also illustrated by the VIX, which measures volatility in the stock markets, being down 19% for the month (but up 57% for the year).

Inflation versus growth.

 Inflation is still the key issue for determining performance when looking holistically at these numbers.  April inflation figures in the US were actually down slightly from March, falling from 8.5% to 8.3%.

In last month’s blog, I wrote about the term recession and how its usage can be quite arbitrary.  Certain measures / economic data can trigger this term being deployed. 

A bear market is a term that you are likely to have heard, generally defined as when a market trades at 20% lower than its all-time high.  As with a recession, this term can be open to interpretation, not least as there are many markets in the world and one sector could be in bear territory while others are actually fine, perhaps even in a bull market (the opposite of bear).

The Nasdaq has clearly breached these parameters, down over 27% since its high in November of last year.  The enormous losses in value of tech companies illustrate how this sector is well and truly growling:  for the year, Facebook down 42%, Snapchat down 70%, Netflix down 67%, to name but a few.

Over at the S&P 500, often the standard bearer, things aren’t quite as clear.  During this month, the 20% decline was indeed breached on 20th May.  However, since then the drop  seems to have triggered a mini rebound with increases of 6%, bringing us nearer to market correction territory (-10%) than a bear market.

There have been 25 recorded bear markets in the US, of which 14 have been followed by a recession, with drops of 20.6% to 51.9% in the S&P.  So it’s important to remember that the other 11 were NOT followed by recession. 

GET A FREE, NO OBLIGATION QUOTE

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

How should investors react?

 So does the current situation offer us buying opportunities or value right now?

As is always the case, your personal situation will drive much of the answer to that question. Attempting to pick a bottom price on either a market or individual company is of course a futile exercise.  Buying good companies at good prices is the key and these are certainly available right now.

Despite what is undeniably a difficult and unsettled global economic environment at the moment, with its many short term challenges, the consumer world continues to grow.  The world’s population grows – it will reach 8 billion by the end of this year or beginning of next, compared to just 6 billion in 2000 and has doubled since 1975.  Urbanization grows and  businesses that are at the forefront of consumer spending (Unilever, Proctor and Gamble et al.) will ultimately drive growth based on the pure fact that more people are buying Magnum ice creams and Pampers nappies.  More and more people are becoming connected to the internet, using Google to search for and buy consumer goods, and therefore growing these businesses.

So growth and life continue.  The Chinese situation is somewhat perplexing and while these lockdowns and zero-COVID policies could drag them back a few years, life will eventually get back to normal, which means growth.

But, in the short term, this inflation issue is not going to magically disappear.  We need the US Federal Reserve (Fed) and other central banks to get this right.  Recent comments by Fed officials about beating inflation “at any cost” and increasing the Federal Funds Rate by  0.5% at all five of the remaining meetings this year (despite a month earlier saying that inflation was getting under control), do not fill me with huge confidence, since higher Fed rates generally suppress the economy while slowing inflation.

I’ve written before about the cost of housing in the developed world and overpaying because of cheap borrowing.  If borrowing is no longer cheap, we could have housing issues on our hands again, where mortgages are unaffordable and homeowners are stranded with negative equity.

So, right now it’s all about Goldilocks principle – getting it just right.

Upon entering the Three Bears’ house, Goldilocks finds three bowls of porridge.  The first bowl she tastes is “too hot,” whilst the second she finds “too cold.”  The third is neither too hot nor too cold, it’s “just right, so she eats it.

The analogy rings true with inflation and interest rate policies. Cold porridge tastes terrible and for sure nobody wants to get burned …

Share on facebook
Share on linkedin
Share on twitter

Personal Finance Discovery Call

Craig MCavinue Tenzing
Open Hours:

Mon – Fri: 8.30 am – 6 pm, Saturday – Sunday: CLOSED

Johannes Heikkila

Advisor
From Finland
Expat for 1 year
Speak Finnish, English & Spanish

Speciality:
- Health Insurance
- Savings Plans

Robert Cunningham

Advisor
From the UK
Expat for 13 years in Thailand & Vietnam
5 years' insurance & financial services

Speciality:
- Health Insurance
- Life Insurance
- Savings Plans

Romain Camillo

Senior Advisor
11 Years in Insurance & Financial Services
Expat in thailand for 7 years
Joined Tenzing in 2020
Speaks French & English


Speciality:
- Health Insurance
- Life Insurance
- Savings Plans"

Nancy Dao

Advisor
From Vietnam
International Business from UK
Lived in Singapore
Speaks Vietnamese & English

Speciality:
- Personal Health Insurance
- Group Health Insurance

Hunter Deems

Advisor
10 years' experience in insurance and investments
Joined Tenzing in early 2020

Speciality:
- Investments
- Savings Plan
- Health & Life Insurance
Patrik Shore Tenzing Pacific Services

Patrik Shore

Senior Advisor
From Sweden & New Zealand
7 years' insurance experience
Joined Tenzing in 2019
Crim Science
Speaks English and Swedish

Speciality:
- Savings Plans
- Health Insurance
- Life Insurance

Geoffrey Mann

Advisor
From the US
Employee benefits & insurance compliance background
Joined the Tenzing team in 2019
Law degree from the US

Speciality:
- Personal Health

Nhu Nguyen

Senior Advisor
From Vietnam
Joined Tenzing in 2017
Fluent in Vietnamese & English

Speciality:
- Group Health & Life Insurance
- Personal Health"

Ian Comandao

Health Insurance Manager
From Philippines
MBA from Duke University
Expat for 20 years in US, China, Hong Kong & Vietnam Worked at Tenzing since 2018
Fluent in English, Tagalog, Mandarin

Speciality:
- Personal Health Insurance
- Group Health Insurance
- Business Insurance

Craig McAvinue

Director of Wealth Management
From the UK
25 years' expereince in investments & insurance
Expat in Thailand for 5 years
Chartered Accountant by trade
Holistic approach to consulting his clients

Speciality:
- Investments
- Savings Plans
- Health & Life Insurance

Quinn Miller

CEO & Managing Partner
From the US
Joined Tenzing in 2014
Expat for 10 years in Vietnam
Finance & Entrepreneurship Degrees

Speciality:
- Group Health Insurance
- Life Insurance
- Savings Plans"
  • 84 35857 2629
  • 84 35857 2629
  • quinn.miller@ten-pac.com

Quinn Miller

CEO & Managing Partner
From the US
Joined Tenzing in 2014
Expat for 10 years in Vietnam
Finance & Entrepreneurship Degrees

Speciality:
- Group Health Insurance
- Life Insurance
- Savings Plans"