lutz logo
lutz logo
  • Services
  • News & Insights
  • About
  • Client Portal
Search
  • Services
  • Accounting
  • Advisory
  • Financial
  • M&A
  • Talent
  • Tech
  • Accounting Services
Services
  • Audit & Assurance
  • Client Advisory Services
  • Outsourced Accounting
  • Tax
  • Business Valuation
  • Litigation Support & Forensic
View All
Industries
  • Agribusiness
  • Construction
  • Family Office
  • Healthcare
  • Manufacturing & Distribution
  • Nonprofit
View All
News & Insights
Financial Access Checklist
Guide
Financial Access Checklist

Share this information with your spouse to assure you each have access to manage important financial tasks independently.

Read More
  • Advisory Services
Services
  • Accounting
  • Financial
  • M&A
  • Talent
  • Tech
View All
Resources
The Art of Budgeting
Recording
The Art of Budgeting + Smart Saving Strategies
Learn how to get your finances under control and increase your savings! Hear real-life examples and best practices to secure a successful future.
Watch Now
Business Insights
Comparing Business Valuation Methods
Blog
Comparing Business Valuation Methods: Which is Right for You?
Valuation experts rely on three primary approaches to determine the value of a business: income approach, asset approach, and market approach.
Read More
  • Financial Services
Services
  • Financial Planning
  • Investment Advisory
  • Retirement Plan Services
  • Pooled Employer 401(k) Plan
View All
Resources
  • Lutz Financial Blog
  • Our Team
  • Client Portal
  • Charles Schwab Login
  • Send Files Securely
Contact Us
NEWS & INSIGHTS
Website Featured Content Images
Market Commentary
Financial Market Updates

Read our latest financial market updates and sign up to receive them straight to your inbox.

Read More
  • M&A Services
Services
  • Sell-Side Representation
  • Transaction Advisory
  • Exit Planning
  • Business Valuation
View All
Resources
Selling a C Corporation
Blog
Factors to Consider When Selling a C Corporation

Understand the tax issues affecting both buyers and sellers involved in C corporation merger and acquisition transactions

Read More
Business Insights
Post-Acquisition Checklist
Guide
Post-Acquisition Checklist for a Seamless Transition
To help you navigate this critical period, we've compiled a comprehensive checklist covering key areas that demand attention after the deal closes. 
Read More
  • Talent Services
Services
  • Search & Staffing
  • Outsourced HR
  • HR Consulting
View All
Candidate Resources
  • Job Seeker Process
  • Current Opportunities
  • Lutz Internships
Contact Us
News & Insights
Overcoming Bias in Recruitment
Blog
Unconscious Bias in Recruitment: How to Overcome It
Learn how to take the bias out of recruitment and build a diverse, talented workforce with these tips.
Read More
  • Tech Services
Services
  • Outsourced IT
  • Data Analytics
  • Technology Strategy
  • Software Consulting
View All
Resources
When to outsource your IT
Blog
How to Know When It's Time to Partner with an IT Pro

One day your technology seems manageable, and the next you're wondering if you need more support. Here are the clear signs it's time to outsource your IT.

Read More
Business Insights
Untitled design (1)-Mar-08-2024-08-50-35-9527-PM
Video
Pella Client Testimonial
"I've used them for valuation work, stock transfers, hosting all of my technology, and now data analytics. I'd say they lead the pack in terms of anticipating what I'm going to need before I even know I need it."
View Now
Business Insights
BLOG
Explore Topics

Get the latest news and insights on relevant topics that matter most to you.

View All
Webinars & Events
Events
Register Today

Register for an upcoming event or access our library of on-demand recordings.

View All
Market Updates
COMMENTARY
Stay Informed

Catch up on market moves with our weekly update, featuring in-depth insights and analysis.

View All
Resources
EBOOKS & GUIDES
Download Now

Take a deep dive into challenging business topics with these free educational resources. 

View All
  • News & Insights
  • Business Insights
  • Webinars & Events
  • Market Updates
  • Resources
Business Insights
BLOG
Explore Topics

Get the latest news and insights on relevant topics that matter most to you.

View All
  • About
About

Lutz is a business solutions firm for people seeking a partner to help energize and heighten economic and organizational success.

Our Company
Our Team
Offices
Careers
Internships
Contact Us
  • Contact
Client Portal

Log in to your relevant client portal to access your account, upload documents, or make a payment.

Make a Payment
Accounting Client Portal
Financial Client Portal
Charles Schwab Login
Send Files Securely
Contact Us
  • Market Commentary

What Does the Rough Start to the Year Mean for Investors? + Financial market Update + 7.26.22

Josh Jenkins, CFA, Chief Investment Officer, Principal
July 27, 2022
What Does the Rough Start to the Year Mean for Investors? + Financial market Update + 7.26.22

STORY OF THE WEEK

WHAT DOES THE ROUGH START TO THE YEAR MEAN FOR INVESTORS?

The first half of 2022 was unpleasant for investors, to say the least, with the S&P 500 down a painful 19.96%. In fact, over the last 95 years, the stock market has gotten off to a worse start just twice. The financial media wasted no time hyping up this fact, of course. After all, stirring up fear is a tried-and-true way to attract eyeballs. How should investors feel entering the second half of the year? Does a challenging first half of the year doom us to a rough second half as well?

To answer this question, we looked at the US stock market’s performance going all the way back to 1927. During those 95 years, the stock market experienced a negative return during the first six months on 31 occasions. The table below illustrates these negative six-month returns, ranked from largest to smallest, along with the market’s return during the second half of that year.

U.S. Stock Performance Following a Negative 1st Half

Source: Morningstar Direct. U.S. Stock Market Returns were based on the IA SBBI Large Cap US Index. All returns are cumulative and include data from Jan 1927 through June 2022.

This data demonstrates that simply knowing what happened in the first six months of any given year tells us very little about what might happen during the second half. Of the 31 years where the market started off negative, performance during the second half of the year was pretty much evenly split. Stocks had a positive return over the following six months on 16 occasions, while they continued to fall during the other 15. Overall, the average return in the second half of the year following a loss in the first half was a positive 3.4%. If we looked at the five worst starts to a year, which roughly equates to the market starting down 15% or more, the market finished the year positive every time.

The graph below illustrates this idea in a different way. Performance for each of the 95 years analyzed is included, with the first half return plotted horizontally and the second half return plotted vertically. If there were a strong relationship in the data, the dots would form a visible pattern. Instead, the data points appear to cluster randomly, forming a shapeless jumble.

Source: Morningstar Direct. U.S. Stock Market Returns were based on the IA SBBI Large Cap US Index. All returns are cumulative and include data from Jan 1927 through June 2022.

The main takeaway for investors is that despite the rough start to the year, continued poor performance is not assured. Though, it can’t be ruled out either. Fortunately, a substantial amount of bad news is already being priced into the market. As a result, valuations have fallen from elevated levels, improving expected returns moving forward.

WEEK IN REVIEW

  • The second quarter earnings season is in full swing, with 21% of S&P 500 companies having reported results according to FactSet. The blended earnings growth rate, using actual data from companies that have reported and expectations for those that have yet to report, has increased to 4.8%. Entering earnings season, earnings were expected to increase by 4.0%.
  • On Wednesday (7/27), the Federal Reserve will conclude its monetary policy meeting. The market is currently expecting a 0.75% hike, which will bring the federal funds rate up to 2.25% to 2.50%. This expected rate would match the height of the last hiking cycle, which peaked in 2018.
  • It is a busy week for economic data. On Wednesday, we will get durable goods orders and pending home sales. On Thursday, we will get the first look at Q2 GDP and initial jobless claims. Finally, on Friday, we will get the University of Michigan consumer sentiment index and inflation expectations, as well as personal consumption expenditures (PCE), which is the Federal Reserve’s preferred measure of inflation.

LFS BLOG

  • Investor Do’s and Don’ts During a Bear Market
  • Why Investors Should Own International Stocks
  • 3 Things All Investors Should Know

ECONOMIC CALENDAR

Source: MarketWatch

HOT READS

Markets

  • West Coast Ports Reduce Idling Vessels as Container Supply Increases (CNBC)
  • Why a Strong Dollar is a Double-Edged Sword for the U.S. Economy (WSJ) Video
  • Jobless Claims Rise Again in Another Sign that Labor Market is Cooling (CNBC)

Investing

  • Little Ways the World Works (Morgan Housel)
  • A Giant Distraction to the Business of Investing (Ben Carlson)
  • There Will Always Be Sorcerers (Nick Maggiulli)

Other

  • Scan Your Shopping Cart With Yuka and Make Healthier Choices (Wired)
  • New Phase of Matter Opens Portal to Extra Time Dimension (Scientific American)
  • Have Better Conversations With Friends – Or Anyone (WSJ)

MARKETS AT A GLANCE

Source: Morningstar Direct.

Source: Morningstar Direct.

Source: Treasury.gov

Source: Treasury.gov

Source: FRED Database & ICE Benchmark Administration Limited (IBA)

Source: FRED Database & ICE Benchmark Administration Limited (IBA)

IMPORTANT DISCLOSURE INFORMATION

  • Competition, Achiever, Relator, Analytical, Ideation

Josh Jenkins, CFA

Chief Investment Officer, Principal

Josh Jenkins, Chief Investment Officer, began his career in 2010. With a background in investment analysis and portfolio management from his previous roles, he quickly advanced to his current leadership position. As a member of the Lutz Financial Board and Chair of the Investment Committee, he guides Lutz Financial’s investment strategy and helps to manage day-to-day operations. 

Leading the investment team, Josh directs research initiatives, while overseeing asset allocation, fund selection, portfolio management, and trading. He authors the weekly Financial Market Update, providing clients with timely insights on market conditions and economic trends. Josh values the analytical nature of his work and the opportunity to collaborate with talented colleagues while continuously expanding his knowledge of the financial markets. 

 

At Lutz, Josh exemplifies the firm’s commitment to maintaining discipline and helping clients navigate market uncertainties with confidence. While staying true to the systematic investment process, he works to keep clients' long-term financial goals at the center of his decision-making. 

 

Josh lives in Omaha, NE. Outside the office, he likes to stay active, travel, and play golf. 

402.763.2967

jjenkins@lutz.us

Connect on LinkedIn

Recent News & Insights

Private Practice
Recruiting medical talent? Know the Tax Implications of Modern Compensation Packages
With the average medical school debt now exceeding $200,000 and nearly 35% of physicians ...
Read More
Talent
How Stay Interviews Help Retain High Performers
When a company loses a high-performing employee, it often disrupts teams, affects morale, and ...
Read More
M&A
The Importance of Hiring an M&A Team
Selling or buying a business is one of the most significant financial decisions an owner will ...
Read More
Client Advisory Services
Treasury Management: Strategies to Improve Financial Stability & Growth
Good treasury management keeps your business steady and growing. At its core, treasury ...
Read More
module-bg-desktop module-bg-mobile

Let’s get you where you want to go.

We work to simplify complexities, help make critical business decisions, and confidently focus on the things that are truly important to you. We embrace your business as our own to spark the right solutions and help you thrive.
Contact Us
Lutz-Logo-white
  • Services
    • Accounting
    • Consulting
    • Financial
    • M&A
    • Talent
    • Tech
  • About
    • Our Company
    • Our Team
    • Offices
    • Careers
    • Internships
    • Current Opportunities
  • Client Portal
    • Make a Payment
    • Accounting Client Portal
    • Financial Client Portal
    • Send Files Securely
    Submit RFP
TOLL-FREE: 866.577.0780 | © Lutz & company, PC 2025 | Privacy Policy
Follow us on Facebook Follow us on LinkedIn Twitter - X Logo Follow us on Instagram Follow us on Facebook