Investment Commentary – Q4 2022

There are many ways to characterize 2022 and not too many of them are good, certainly as it relates to the financial markets. The story throughout was consistent- soaring inflation, hawkish Fed, strong labor market, and liquidity being sucked out of the system leading to a sell-off in both equities and fixed income (more detail below). A Q4 rally helped to take off some of the sting, but 2022 was simply unkind.


We have written many times about the tricky business of predictions. In 2022, most institutions forecast returns in the 8-10% range. Not even close! So, what was missed? A few of the major “unforeseeables” included the Russian invasion of Ukraine, an 18-fold increase in the policy rate in the US, and cratering currencies in Japan, the UK, and Europe. FAANG stocks had a comeuppance and buy the dip became “hold on tight”. We collectively waited nervously to catch the most updated inflation report and related “Fed speak” as if we were watching the who shot J.R. reveal on the TV show Dallas. Markets were volatile as the S&P 500 saw many moves of 1% in either direction. Markets are not likely to be surprised by the Fed in 2023 to the same extent and that could mean that fixed income may provide portfolio ballast and reduce overall portfolio volatility. We will not predict.


The Chinese New Year begins on January 22nd. We note that 2023 is the year of the Water Rabbit. The sign of Rabbit is a symbol of longevity, peace, and prosperity in Chinese culture. 2023 is predicted to be a year of hope. In that spirit, we hope that you have a Happy and Healthy New Year!


Fourth Quarter Market Review

2022 was a brutal year for investors, with few places to hide. The war in Ukraine and central banks’ fight against inflation led stocks and bonds sharply lower for the year. The fourth quarter bought some relief, but not enough to change the outcome for the year.



Equities around the globe struggled in 2022. Within equities, developed international markets in Europe, Japan, etc. (MSCI EAFE) outperformed the US equity markets in the fourth quarter and the year with a return of 17.4% and -14%, respectively. The outperformance came as the region had a larger exposure to commodity producers and defensive stocks, as well as lower exposure to technology companies. US equities (S&P 500) had their worst year since 2008 and fell 18.1%. Finally, emerging markets (MSCI EM) were the worst performer, with a return of -19.7% for the year led by China, which struggled as Covid lockdowns hurt its economy


Surging oil prices in the first half drove massive gains in the energy sector. The energy sector gained 65.7% for the year, even though oil prices retreated significantly in the second half. In addition, defensive sectors such as utilities, consumer staples, and health care held up better amid the market carnage as investors sought safety. On the other hand, technology-related sectors were the worst performers, thanks to rising interest rates and recession fears.


Value stocks significantly outperformed growth stocks. Growth stocks, often synonymous with next- generation technology companies listed in the Nasdaq index, fell 32.5% as investors demanded certainty in near-term profits amid fear of rising interest rates taking a bite out of uncertain future earnings. On the other hand, value stocks, often considered undervalued, steady, and sometimes even boring dividend payers such as those listed in the Dow index, fared much better and only fell 6.9%.


Bonds had their worst year ever! The Federal Reserve raised the federal funds rate at the fastest pace in history with seven interest rate hikes, bringing the effective rate to a range of 4.25%-4.50% from zero in January. The speed of the interest rate hikes led bond yields significantly higher, driving bond prices to historic lows in 2022. The 2-year Treasury yield rose to 4.3%, up from 0.8% in January, while the ten-year yield rose to 3.8% from 1.5% at the start of the year. US bonds (Bloomberg US Aggregate) fell 13.1%, the worst year since the index’s inception in 1976. Long-term bonds (Bloomberg US Treasury Long) with greater sensitivity to interest rates experienced the worst of the damage at -29.3%, while shorter-term bonds (Bloomberg US Treasury Short) offered the only bright spot for bond investors with a gain of 1.0%. Even Treasury Inflation- Protected Securities (TIPS), designed to protect investors in times of high inflation, did not offer refuge against rising interest rates, ending the year with double-digit losses. Finally, high-yield bonds also finished the year down 11.2%, primarily due to a flight to higher quality amid uncertainty.


Commodities gained as oil and natural gas hit highs, while gold was a disappointment. The war in Ukraine amplified inflation concerns sending food and energy prices higher for the year. Broad commodities (Bloomberg Commodity Index) gained 16.1% in 2022. Gold prices fell 0.7% as it struggled to compete with rising bond yields and a stronger dollar and failed to meet expectations as an inflation hedge. Higher interest rates in the US relative to global developed markets led the dollar to rally 9.5% for the year. Finally, US REITs lost 24.9% in 2022 over concerns of rising costs due to higher interest rates.


The classic “60/40” portfolio has only suffered losses larger than 2022’s decline once in the last 45 years. With bonds suffering their worst year on record, the classic “60/40 diversified portfolio” comprised of 60% US stocks (S&P 500) and 40% US bonds (Bloomberg US Aggregate) suffered its second-worst year on record. It fell 16.1% going back to the inception of the Bloomberg Aggregate index in 1976. The 60/40’s losses in 2022 were only topped by 2008’s decline of 20.1%, which were driven entirely by losses in the S&P 500 alone.




We have just come through what Kopernick Global terms “A Decade of Economic Craziness and Delusion”. In his January 2023 letter to clients, CIO David Iben, CFA, summarizes the last decade as follows: “Any familiarity with economic theory would lead one to the understanding that the suppression of interest rates would, as it always had in the past, lead to an abundance of malinvestments, some dangerous and some outright foolish. Speaking of outright foolish, over the past ten years we have seen:


  • Banks accept negative interest rates when loaning money to homebuyers


  • Investors pay for the “privilege” of loaning money to distressed countries (including those that they had recently derided as the “PIGS”)


  • Junk bonds begin to trade at sub-inflation rate yields


  • An index of money-losing tech stocks going parabolic


  • Money-losing “venture” companies start to go public—a vast majority completely unprofitable Meme stocks (including bankruptcies) become all the rage


  • Non-Fungible Tokens (NFTs), second-tier crypto currencies, Special Purpose Acquisition Companies (SPACs), and other “assets” of dubious value become de rigueur



In summary, mainstream thought began to accept that debt, profit, accounting, valuation, and even research had all stopped being worthy of thought or consideration.”


Iben does a nifty job of summarizing the impact of loose monetary policy. Markets were buoyed by easy money culminating in extended valuations that saw growth stocks significantly outperform value stocks. We harken back to the 2000-2002 internet stock collapse to find a similar “growth to value” shuffle that we saw in 2022. The cycle of cheap money began to unwind in early 2022 and take down many of the highfliers noted above. Yet, despite the big price markdowns, the percent of unprofitable companies in the Russell 2000 (small company index) is at around 41% (from 54% in 2020) which is about where it sat in 2002 (see below).


Source: J.P. Morgan Guide to the Markets December 31, 2022


So what happens now? Seems the questions du jour fall into a few headline categories. Will the US and other countries fall into recession and if so, how deep? Will inflation subside and how quickly? Will it be enough to cause the Fed to pause and consider cutting (when?)? Will corporate profits meet current estimates or are projections still too high (implying further earnings markdowns on the way)? There are many others of course, but we will focus on these as they seem to top the list.


The impact of the 2022 rate hikes now permeating our economy should result in slower growth and inflation moderation. The strong labor market has kept recession talk at bay but increased the Fed’s resolve. Last week, the unemployment report was greeted favorably with the idea that wage growth was slowing, and that the Fed would take note. It was the first time in many that markets rallied following one of these reports.

Unfortunately, markets have been more wrong than right when it comes to predicting Fed action. What was not highlighted last week as much by the media was the drop in the ISM Services report, which screamed stagflation. The overall index came in at 49.6, well below consensus expectations and the first reading in contraction territory since the onset of COVID. The inverted yield curve still suggests recession but Q4 looks like it will be positive “2% plus”, corporate balance sheets remain healthy, and debt should still be manageable given the considerable number of homeowners that refinanced when rates were low.


In 2022, monthly balance sheet runoff from the central bank increased to about $100 billion (about $310 per person in the US) per month and there is a high likelihood that this will continue in 2023. Most importantly, the Fed has been clear that they are more concerned about inflation than recession. The Fed has acted forcefully to keep inflation expectations well anchored, and some would say mission accomplished. Now the hard part- keeping restrictive policy even if the economy contracts and unemployment rises. Having had to play catch-up and understanding the mistakes from the past, the Fed is unlikely to be quick to move to a less restrictive posture. If we do get a recession (we see institutions suggesting a 50% probability), it will be the most anticipated in modern history. More importantly, investors expect the economy to falter, corporate profits to decline, and unemployment to jump. Before the economic earnings and job market data hit bottom, markets will have already begun pricing in the next phase of the economic cycle.


While there is never a consensus, the betting line would suggest that inflation will continue to moderate. Some believe inflation will remain very sticky while others believe we may see a sharper fall. Supply chain imbalances


have improved but wage growth inflation is tougher to resolve although the Indeed job posting data has started to turn lower. Core goods inflation is coming down and we anticipate housing and owner’s equivalent rent will decline later in the year. If inflation does continue to move lower (and we think that will occur) and the Fed pivots, it will make sense for investors to again not fight the Fed.


Profit margins are expected to decline, and the charts below put this into context. We think earnings forecasts may be on the higher side (but coming down) but have seen these get adjusted over the course of the year with companies generally beating expectations each quarter. From a valuation standpoint, the S&P 500 forward P/E ratio is now at 16.65 (IBES, FactSet), right at its 25-year average. International stocks are at a discount to US stocks and have been rallying the last few months on a weaker dollar.



It is unusual for markets to post successive years of negative returns. We pointed out in our last letter that over the last 50 years, markets have been positive in the year following the mid-term elections. Below we show a chart of returns after a negative 12 months as we had in 2022. History is certainly on the side of the market, but as pointed out, there are many variables at play as we enter the new year.


We are more constructive on markets in 2023 but recognize that there are many risks to the downside. We base our opinion on the pain incurred in 2022 that has improved valuations, potentially more normalized fixed income markets offering a reasonable return and ballast, and a Fed that is likely to hit the pause button at some point during the year. We see flash points ahead including a battle over the debt ceiling and continued pressure from higher rates on the already excessive government debt assumed (more on that in the future). The economy is slowing, and a hard landing could mean increased downside pressure on markets.


Our investment committee has opted to add to international allocations, including emerging markets, to bring them more in line with more historical weightings. Valuations overseas are attractive relative to the US, potential for a weaker dollar could serve as a tailwind, and China’s economic reopening and policy easing could be bullish for commodity prices and commodity related markets. In the US, we are neutral growth vs value but have a slight overweight to dividend paying stocks. We also maintain a tilt to energy stocks. We have utilized hedged equities with downside protection to smooth the ride and protect portfolios in the event of a 2022 repeat while preserving significant upside potential. Finally, we are incredibly pleased to have access to one of the top long/short funds in the country. The fund plays a prominent role in our portfolios.


Our headwinds/tailwinds summary is below.


  • Federal Reserve tightening aggressively
  • Inflation (commodity prices) staying high in a decelerating economy
  • Labor market still strong- good and bad
  • Equity and fixed income valuations remain high on an historical basis despite the recent pullback
  • Elevated corporate and government debt levels facing higher interest costs and looming debt ceiling could have meaningful impact on economy and financial markets.
  • Geopolitical risks always a factor- unknown what could happen just as the Ukraine war took us by
  • Covid still impacting the world but to a lesser



  • Strong labor market a double-edged sword
  • Some signs of economic slowdown could start to show up in the numbers important to the
  • Significant cash on the sidelines- hedge funds are holding a ton of cash and contrarian signals from sentiment readings are growing louder.
  • Healthy consumer and corporate balance sheets and continued consumer spending although savings are
  • Earnings expectations are still positive in


PRW News

Elliot led a discussion on year-end tax planning for over 350 financial advisors on the Smart Asset platform and spoke with several media outlets on the same topic.


Thank you for your trust and confidence. We look forward to connecting with you over the coming months and wish you all the best in the New Year.


William A. Payne

Richard A. Renwick

Elliot B. Herman

Investment Commentary – Q3 2022

Last Spring, the hometown Boston Celtics were two games away from securing banner number 18 before falling to the Golden State Warriors in a terrific but heartbreaking (for Celtics fans) series finale. The Celtics’ elusive search for another championship stands in contrast to the period in the 1960’s when the Celtics dominated the league, winning championships every year but one in that decade (a total of 11 in 13 seasons). The team was led by its fearless captain and greatest winner in team sports history, Bill Russell, who left us this summer at the age of 88. Beyond basketball, Russell left his mark on the world in many ways including his indefatigable work fighting for civil rights and social justice fights that continue in earnest today.


“Defensively, he was always there to help us” said one of his teammates. Russell had the athleticism and intelligence to force the opposition to do what he wanted them to do and the uncanny ability to “pivot” quickly to lend a helping hand to block or minimally alter a shot. It is said the defense wins championships and Russell’s attention to defense certainly proved the point.


In today’s market environment, defense is paramount as the risk on rally of mid-summer has yielded to a risk off environment. The market rally this summer was fueled by the narrative that inflation had peaked and that it was just a matter of time before the Fed would “pivot” and slow their rate hikes leading to a soft landing in the economy. Unfortunately, the strength of the labor market (which we wrote about in September) has seemed to deepen inflation fears. Last Friday, the Labor Department reported that the economy had added 263,000 jobs in September, while the unemployment rate had fallen back to multiyear lows of 3.5%. More concerning may have been a surprise drop in the participation rate, to 62.3%, indicating that competition for available workers would remain intense. Nevertheless, the increase in wages appeared to be slowing, with average hourly earnings continuing to decline on a year-over-year basis to 5%, compared with March’s peak of 5.6%. Markets moved back into risk-off mode following a solid start to the quarter.


Below, we explore the conditions that are currently influencing the direction of markets and our thoughts on what could happen in the intermediate and long-term. Markets dislike uncertainty and the current environment has given us plenty to not like. The set up coming into the quarter is eerily similar to last quarter when markets went on a surprising run. Sentiment is in the dumps and earnings are expected to be poor. Is a contrarian move possible?


Third Quarter Market Review


Source: Zephyr StyleADVISOR


  • The quarter began with a short-lived summer rally that fizzled only to set new lows. Record high inflation, aggressive interest rate hikes from global central banks, and fear of recession left no place for investors to For the third quarter, the diversified 60/40 portfolio invested 60% in global stocks, and 40% global bonds returned -6.8% and performed worse than one just invested in global stocks (-6.7%) as global bonds posted dismal returns (-6.9%). Within equities, US stocks sunk back in bear territory to end the quarter -4.9%. Similarly, US bond yields which move in the opposite direction of prices, rose to their highest levels in years as hopes for falling inflation were erased when core inflation rose in August despite falling gas prices.



  • Within US equities, 9 out of 11 sectors suffered losses in 2Q22. Surprisingly, the consumer discretionary sector gained 4.4% for the quarter, helped by select stocks despite having a greater sensitivity to the overall business However, it remains the second worst performing sector at -29.9% for the year. Similarly, the energy sector gained 2.3% despite falling oil prices during the quarter and remains the only sector with positive returns of 34.9% for the year.


  • Value stocks reverse trends and Growth stocks are often synonymous with the high-flying companies in the markets like technology, while value stocks are often considered undervalued, steady, and sometimes even boring. For the quarter, value stocks underperformed their growth counterparts, a reversal in trends from the prior quarter. Still, large-growth stocks are on pace to have their worst year since 2008.


  • International equities underperformed US equities in 3Q22. Developed international, emerging markets ended 3Q22 at -9.3 % and -11.4%, respectively, as the energy crisis and recession fears continued to roil European economies while China continued to struggle under its zero COVID policy. A strong dollar also had a significant impact. Generally speaking, a stronger dollar translates to lower returns for international investments. This can be seen in its local currency returns, especially for developed international, which ended 3Q22 at -3.5%. In local currency, this would put it as one of the better performing developed market equity markets without the currency drag.


  • Bonds post steep losses in the third quarter. US bonds fell 4.8% in the quarter as the Fed’s aggressive efforts to tame inflation brought two more rate hikes of 0.75%, raising the effective federal-funds rate to 3.00%-3.25%, its highest level since 2008. Despite higher inflation, TIPS fell 5.1% due to rising rates despite inflation concerns. Longer-term Treasuries, which have the greatest sensitivity to interest-rate changes, were the hardest hit and fell by 9.6%. US high yield bonds were surprisingly among the best performing sector and only fell 0.6% despite ongoing recession Lastly, a stronger dollar and inflation woes also led international bonds lower for the quarter.


  • Key commodities, including gold, oil, and copper, declined over concerns of weaker demand due to global economic slowdown. Oil prices fell below $80/barrel to their lowest levels since Jan ’22. Gold prices fell 7.9% for the quarter and have failed to meet expectations as an inflation hedge or a safe haven investment in 2022. Expectations for higher interest rates in the US led the dollar to rally 8% for the quarter and 17.6% for the year. One notable exception within commodities were grains, specifically wheat, with strong gains for the quarter as the conflict in Ukraine continues to impact the world supply. Finally, US REITs lost 10.8% for the quarter over concerns of rising costs due to higher interest rates.



The Federal Reserve has made it abundantly clear that they are willing to sacrifice the economy to recession to correct their policy mistakes and tame inflation. Inflation worries were exacerbated last week after the so-called OPEC+ group of oil exporters announced a 2 million-barrel per day cut in target production, pushing oil over the $90/barrel mark for the first time since late August. As noted above, financial markets overreacted last week to an insignificant dip in unemployment because the Fed overreacts to the data as well. Markets have been terrible at predicting the latest inflation and employment reports resulting in high volatility and moves to the downside. Hoping for better news has been disappointing to say the least, especially bad when you consider that we are in effect rooting for job losses! The Fed, and Chairman Powell specifically, have told investors that they want to see a material softening in the labor market, and an unemployment rate at 50-year lows does not fit the bill.

There are many reasons for the continued strength in the labor market. Employers are continuing to rehire both people who were let go during the pandemic and people who would have been hired if Covid had not happened. While this effect is fading—private payroll growth averaged 337K in the third quarter, compared to 527K in the first—it is still quite strong. Service sector jobs continue to be in demand, and we have yet to figure out the quagmire that is our immigration policy. For the Fed, the best possible labor market outcome next year is that wage growth slows without a big increase in unemployment, so a near-term sustained downshift in wage growth would allow officials to start talking about the end of the tightening. It is possible that some softening will show up early next year and that would be a welcome surprise.

Taking a step back, there are many culprits that have gotten us to this point. Bad monetary policy i.e., printing too much money has devalued the currency relative to the value of real goods and services, driving prices up. The pandemic sent shock waves across the world and disrupted our daily lives forever. Covid issues roiled supply chains and shipping, both of which, fortunately, are seeing some improvement. Some blame good old fashioned corporate greed whereby companies take the opportunity to drive up profits during a crisis. Demand has increased as consumers interact in a post-covid environment and spend the government largess they have been handed. The spending, moving from goods to services, has driven down the cushion that has so far buoyed the economy. Pantheon Macroeconomics reported that peak savings were at $2.1 trillion last August and about $630 billion of that has been spent. The aforementioned pressure on wages has also been a big contributor to inflation and that is one of the harder ones to contract. Throw in an unexpected war in Ukraine and it is not hard to see how we got here.

The Fed has begun to succeed in taming the housing market. Mortgage rates in the US have moved over 6.5%, well above levels at the beginning of the year. On October 3, 2022, Fortune magazine reported that “The U.S. housing market to see the second-biggest home price decline since the Great Depression”. This headline, while attention grabbing, fails to account for the remarkable increases that took place over the past decade fueled by that same Fed. Housing still remains structurally undersupplied for the near-term and the pipeline for new home construction is dry. Rental markets are equally tight, with historically high occupancy levels. This dynamic does not bode well for the “shelter inflation” figure which makes up one-third of the overall Consumer Price Index (CPI) basket and more than 40% of core CPI. The US needs more housing, but this will not come quickly enough to meet demand. Recent data shows a drop in housing permits as homebuilders scale back. Hurricane Ian’s effects on the price of materials on top of the billions of dollars in damage will be felt in the coming months as well. On a positive note, many homeowners took the opportunity to refinance into low fixed-rate mortgages helping to keep exiting home debt manageable.


The conundrum we face is not likely to reverse quickly as the impact of the Fed’s hikes has yet to permeate the economy. The next 3-6 months should start to show a slowing in demand and a rise in unemployment. Volatility is likely to remain elevated as conditions push south. The impact of sticky inflation, elevated wage growth, and a higher cost of capital are placing downward pressure on earnings and profit margins. Some of the mark downs have been reflected in prices but P/E’s still remain higher than they have been in prior periods of higher inflation. In addition, the US dollar remains stubbornly high, and this puts additional pressure on foreign companies and large multinationals (as well as many S&P 500 constituents with large overseas business). While analysts have brought down their estimates, we expect further downward revisions this quarter and next. More on that below.


There is no universal agreement on whether we are in recession now but next year seems like a good bet. First Trust CIO Brian Wesbury recently wrote “We are not “recession deniers,” we just don’t think one has started yet. The distortions of economic activity from lockdowns, massive deficit spending, and money printing are immense. It’s hard to imagine the US can unwind these policies and not have a recession. Monetary policy, for example, is going to have to get tight and stay tight to bring down inflation and keep it there, so we don’t get into a stop-and-go cycle of inflation problems like we did back in the 1970s and early 1980s. And a monetary policy that gets tight enough and stays tight enough for long enough to achieve that goal is very likely to cause a recession. We’re just not there yet.”


Markets have now retested and fallen below the lows earlier in the year. Sentiment according to the Bull/Bear is at –30.8%. The last time we saw this level was in early July when the reading hit –33%, just before earnings season and a (in hindsight) bear market rally. Since July, we have experienced a devastating hurricane, an averted but potentially upcoming rail strike, and an escalation in geopolitical tensions that shows little sign of abating. The wall of worry is high. So, what could go right?


Certainly, any signs of inflation slowing down would be most welcome. Earnings will be in focus this month and any surprises there could provide a boost. That said, Charles Schwab’s Jeffrey Kleintop recently shared that there is a historically tight relationship between global manufacturing purchasing managers index (PMI) and earnings growth for global companies. He writes “the PMI tends to lead the trend in earnings growth by three months, with the dividing line at 50 between expansion and contraction in global manufacturing aligning with the analysts’ consensus outlook for earnings growth and contraction in the coming year. The PMI turned negative in September as the quarter came to an end, likely pointing to flat earnings on a year-over-year basis for global companies as we look out to the fourth quarter.” The survey did show a continued drop in the survey’s measures of supply-chain tightness, which points to a steep slowing in margin inflation and in turn consumer inflation. Finally, we know that the cure for higher inflation is inflation itself. While sticky, we do expect inflation to come down next year, to what level is very unclear.


Minutes from the most recent Fed meeting showed that ‘several participants indicated that, once the policy rate had reached a sufficiently restrictive level, it likely would be appropriate to maintain that level for some time until there was compelling evidence that inflation was on course to return to the 2% objective” – but a shift to smaller rate hike and then a pause may not too far off, if the inflation data behave. We have three CPI reports before the December Fed meeting which will impact the Fed direction. In the interim, we will see the mid-term elections play out where markets have historically done well post-election.


There are certainly no guarantees that this year will follow suit. However, investor pessimism, as seen in the Bull/Bear ratio and in the Put/Call ratio, could be signs that the markets are reaching an inflection point.


Markets can move higher during periods of tightening as witnessed with Fed tightening during the 2003-2007 bull market and again during the 2009-2020 bull market (St. Louis Fed). Certainly, the dynamics today are much different, and we are less sanguine about a quick return to a bull market as bear markets have normally lasted longer than average during recessions.


The silver lining for investors is that after these bouts of volatility, markets tend to rebound strongly in subsequent months. They have historically rallied shortly after midterm elections. History shows that this is not usually a short-term blip either, as above-average returns are typical for the full year following the election cycle. Since 1950, the average 1-year return following a midterm election is 15.1%, more than double that of all other years during a similar period.


S&P Index price return one year after a U.S. midterm election

Sources: Capital Group, RIMES, Standard & Poor’s. Calculations use election day as the starting point in all U.S. election years, and November 5th as a proxy for the starting point in other years. Only midterm election years are shown in the chart. Results in USD.


We remain cautious and have been positioning portfolios accordingly. Specifically, we have raised cash during the quarter, reduced the duration and credit risk in our bond portfolio (replacing funds with credit and duration risk with ultra-short duration funds that are less sensitive to interest rate hikes yet yield north of 4%), and added more hedged ETFs to our portfolios that offer some downside protection through options and leave the door open to capitalize on a good portion of upside. We are very pleased with the performance of our long/short manager, the Invenomic Fund, currently one of the top hedge funds in the industry as ranked by Morningstar, Inc. The fund has provided terrific levels of protection and performance during the market downturn.


The bond market has experienced one of its worst years ever, creating a source of consternation for investors seeking safety. With rates up significantly from the beginning of the year, we are able to finally earn a modicum of return that has been elusive for many years. We still believe that bonds will struggle in the coming year as the Fed continues to tighten. As such, we will keep our interest rate sensitivity low and look for better re-entry points next year. We will also look at other non-correlated assets to add to our portfolios in the coming year as appropriate.


In short, one might describe the outlook as “cloudy, with a chance of meatballs”. The Fed is playing catch up and is very attuned to headlines that support their case for more tightening. For now, we will be watching those numbers with continued angst but maintaining our patience through this challenging time. In addition, we will continue our loss harvesting to help reduce current taxes and set up portfolios to offset future gains.


Our headwinds/tailwinds summary is below.


  • Federal Reserve tightening aggressively
  • Inflation (commodity prices) staying high in a decelerating economy
  • Supply chain issues and declining labor participation hampering economic growth
  • Equity and fixed income valuations remain high on an historical basis despite the recent pullback
  • Elevated corporate and government debt levels now looking at higher interest
  • Geopolitical risks are escalated with the war in Ukraine showing no signs of abating and Chinese and North Korean saber rattling.
  • Covid still impacting the world but to a lesser



  • Strong labor market a double-edged sword
  • Some signs of economic slowdown could start to show up in the numbers important to the
  • Significant cash on the sidelines- hedge funds are holding a ton of cash and contrarian signals from sentiment readings are growing louder.
  • Healthy consumer and corporate balance sheets and continued consumer spending although savings are diminishing.
  • Earnings expectations are still positive in 2022


PRW News


PRW’s Director of Advanced Planning Ted Dziuba was named Most Valuable Player of the Boston Metro Baseball League’s 28+ division for the second year in a row. An avid baseball enthusiast and former minor leaguer in the NY Mets system, you can usually find Ted on a north shore ballfield throughout the spring and summer months playing for one of his 3 amateur baseball teams.


We will be launching our new website this quarter. Please look for an announcement soon.


Thank you for your trust and confidence. We look forward to connecting with you over the coming months.

Duncan Payne

Duncan Payne graduated from Northeastern University in 2012 with a Bachelor of Arts in History and International Affairs. Shortly after graduating, Duncan served 8 years in the Naval Special Warfare Community as a Navy SEAL. Duncan gained valuable leadership experience and tremendous problem-solving capabilities while on Active Duty.


At PRW, Duncan takes great pleasure in producing customized solutions for clients while making sure their goals are realized and all objectives are met.


Duncan is married to his wife Ashley. They currently live in Boston, MA. He enjoys working out, golfing, skydiving, surfing and real estate.



Nathan Baldwin, CFA, CFP®

Nate Baldwin joined PRW Wealth Management, LLC in April 2021 as a Senior Wealth Advisor. He brings to the firm over 22 years of financial planning and investment management experience.


Nate’s primary responsibilities are providing financial planning and investment services to clients, drawing on his own expertise while collaborating with tax, legal, and other internal and external professionals to develop truly comprehensive strategies for clients. He supports our Chief Investment Officer in the performance of investment due diligence, research, and the setting of asset allocation policy. He also monitors, analyzes, and rebalances client investment portfolios. Prior to joining PRW, Nate was a Wealth Management Advisor and Director of Financial Planning at D.K. Brede Investment Management.


Nate earned a B.A. from the University of Massachusetts-Boston and completed the Program for Certified Financial Planners at Boston University. He maintains Series 7 and 63 licenses, is a CERTIFIED FINANCIAL PLANNER™ professional, and a CFA® charter holder.


Growing up as the son of a pastor, he moved a dozen times and spent parts of his childhood in Oregon, Ohio, Pennsylvania, Maryland, and finally (!) Massachusetts, where he is very happy to have put down roots. He enjoys cooking, reading, being outdoors, but mostly just spending as much time as possible with his wife Christina and their three kids: Ava, Gabby, and Aaron.



William A. Payne, CLU®, ChFC®, MSFS

Bill Payne is a principal and co-founder of PRW Wealth Management LLC. His primary focus is advanced planning for high net worth individuals and families. This involves a fully integrated approach to managing, preserving, and distributing wealth in a tax-efficient manner. Bill has co-hosted several New England financial radio shows, been a source for television money segments, and authored a number of articles.  His media consults have included articles in Trusts & Estates, Kiplinger’s, National Underwriter, Boston Business Journal, The Boston Herald, Massachusetts Lawyers’ Weekly, and Life Association News.


Bill serves on the boards of Harbor One Bank (NASDAQ: HONE) and The Old Colony YMCA, one of the largest providers of social services in the Commonwealth.  He and his wife Lynne live in Chatham and enjoy as much time as they can get with their six grandchildren.



Debra Burns

Debra (Deb) Burns is a Senior Support Advisor at PRW Wealth Management, LLC. She has over fifteen years of experience in financial services and currently holds a Series 65 (NASAA Investment Advisers Law Examination) License along with a MA resident Life & Health Insurance License.


Deb studied Human Development and Elementary Education at Lesley University and obtained her Paralegal Certificate from the National Academy of Paralegal Studies. She is a licensed Notary Public for the Commonwealth of Massachusetts. Prior to joining PRW Deb worked as a Client Services & Transfer Specialist with an Independent RIA firm, and as a Financial Consultant with Webster Investment Services.


She is a 25-year resident of Cape Cod where she resides with her son Taylor. She enjoys off-road beaching, paddle boarding, and hiking with her Lab. She also dedicates a lot of her free time to volunteering for The Fresh Air Fund where she’s served as the Fund Representative for Cape Cod & The Islands for the last twelve years.



Marilyn Starbird

Marilyn is a Senior Executive Assistant at PRW Wealth Management, LLC. Her primary responsibilities include providing high level support for senior management, anticipating needs for the PRW team, and providing superior service for our clients.


She has over 20 years’ experience as an administrator in banking and finance. Prior to joining PRW, she worked for a private bank and a large financial firm in Boston.


Marilyn earned her Bachelor’s of Science Degree in Hotel Management from UMass Amherst. She is a licensed Notary Public for the Commonwealth of Massachusetts.


In her free time, Marilyn enjoys traveling and spending time with her two sons, Jared and Jake.



Stephanie Manchon, CLU®

Stephanie is a Senior Support Advisor at PRW Wealth Management, LLC. She has over 15 years’ experience in financial services, focused primarily on delivering exceptional service to clients and building strong, lasting relationships. Stephanie’s experience allows her to work closely with both the investment and insurance teams to help deliver comprehensive solutions to clients. Prior to joining PRW, Stephanie worked as a Client Relationship Consultant with TIAA.


Stephanie holds a Chartered Life Underwriter (CLU) designation from The American College. She maintains Series 7 (General Securities Representative), 63 (Uniform Securities Agent State Law), and 66 (Uniform Investment Advisor-Combined State Laws) licenses and is also a licensed insurance agent. Stephanie lives in Braintree, MA with her husband Gabe and their two children.



Cheryl Mattar

Cheryl is a Senior Client Service Specialist at PRW Wealth Management LLC and has been with the firm for 20+ years. Her primary responsibilities include the processing of all investment business from inception to completion.  She is also responsible for all client-related service and support.


Cheryl earned her Associate’s Degree in Liberal Arts at Eastern Nazarene College in Quincy, MA.  Through ongoing training sessions and conferences with Charles Schwab & Co., Inc., Cheryl stays current on Schwab’s ever-increasing service offerings. With a client-centric focus, Cheryl delivers these services with her special brand of warmth and professionalism.   With over 30 years in the Financial Services Industry, if you have a question, Cheryl will have the answer or find it for you.


In her free time, Cheryl is an avid movie enthusiast, loves fine dining, and spending time with family.  She especially cherishes her time with her nieces and nephews.



Gary A. Wentling, MBA

Gary Wentling is the Director of Finance and Operations for PRW Wealth Management LLC.  His primary responsibility is managing the firm’s daily operations.  This includes workflow and project oversight, financial accounting, computer network administration, human resource administration, and team management.


Gary has over 25 years of experience in the financial services industry.  Prior to joining PRW, he was the Vice President of Operations for a regional appraisal and consulting firm.  Previously, he worked for the commercial lending division of a major trust company, where his responsibilities included financial analysis and internal support.


Gary earned a Bachelor of Arts degree in History with a concentration in Political Science from Westchester University of Pennsylvania and a Masters of Business Administration from Babson College.