Q2 2022 Situation Review
End of Quarter Review
Disclaimer
Value Situations is NOT investment advice and the author is not an investment advisor.
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Much has happened in the markets and the global economy since my previous end-of-quarter round-up for Q1. The world is a decidedly more uncertain and gloomy place and equity market performance reflected this in Q2, with the S&P 500 (SPX) down ~16% and the European STOXX 600 (SXXP) down ~11% vs. Q1. In addition to this, inflation in both the US and the Eurozone ramped further to an annualised 8.6% by June, approximately a full percentage point higher than annualised inflation at the end of Q1.
The combination of surging inflation, COVID lockdowns in China, the ongoing war in Ukraine exacerbating an energy and food crisis, and slowing global growth as a result of these factors drove the SPX into a bear market in June and a global recession is now widely expected by next year. The Model Portfolio was not immune from these macro concerns during Q2 despite it’s intended construction as a basket of idiosyncratic equity situations.
Q2 Situations Review
As before, this review is consistent with my previous reviews (here and here), and as before I must state that I don’t place any great store in quarterly performance as such a short time-frame by definition reflects the type of short-termism that often creates the type of mispriced value situations that I seek to capitalise on.