A late rally at the end of the month helped push stocks higher in November, marking the second monthly advance in a row. Each of the benchmark indexes posted solid monthly gains, led by the Global Dow, which advanced nearly 11.0%. The large caps of the S&P 500 and the Dow rose more than 5.0%. The Nasdaq climbed 4.4%, while the Russell 2000 added 2.2%.

Investors welcomed news from Federal Reserve Chair Jerome Powell, who announced that the pace of interest-rate hikes can slow as soon as December, which likely means a 50-basis point increase, ending the string of 75-basis point rate hikes. The Fed may be taking note of the fact that the labor market has begun to cool (see the employment report below), while consumer price increases are showing signs of moderation. Nevertheless, prices remain elevated entering the holiday shopping season. However, business conditions remained generally positive, and consumers continued to spend, despite rising interest rates and decreasing levels of confidence (see report below).

Inflation & Volatility: 2022 in Review
An abundance of market-impacting variables occurred this year, sparking concern amongst investors as we continue to witness extreme market volatility. Now, as we approach the end of 2022 and reflect on the past year, inflation and volatility appear to be an overarching theme.

Despite much of the world emerging from COVID-19 restrictions, China continues to impose lockdowns, causing a surge of global economic uncertainty this year. Amid the unrest in the largest manufacturing nation, the war in Ukraine has also played a large role in slowing global growth and consumer spending. Many approach the new year with apprehension due to continuous market declines, layoffs sweeping many US companies and consequent concerns of a recession.

Continued increases to interest rates have led to many investor concerns surrounding inflation. The good news, many are confident that inflation may have peaked. Additionally, the rate increases are expected to level off when the Federal Reserve meets later this month as well as in January leaving room for the market to resume growth.

Beacon remains focused on our philosophy that is designed to limit investment losses before they become destructive in today’s volatile market conditions. On May 9, 2022, data indicated for Vantage 2.0 portfolios to trigger its stop-loss strategy moving assets in volatile equities to short-term, high-quality fixed-income positions. Throughout the year, we aimed to eliminate extreme volatility from our portfolios so investors are not experiencing severe ups and downs in their accounts.

Just as we executed our market exit with mechanical precision, our re-entry will be equally methodical. The longer we are out of the market, the more confidence is required to reenter. Since the stop-loss was triggered, we have witnessed the S&P fall 22% and rebound about 18%¹; however, a second more dramatic drop shortly followed, reiterating the importance of our steady approach.

Vantage 2.0 is now 100% invested in Vanguard short-duration bond fund, BSV, which is heavily weighted on the Treasury side to help minimize risk. The overwhelming need for consistency in today’s economy is apparent. Our assets under management (AUM) have increased over the past year, now exceeding $4.9 billion². As we navigate the current market volatility and economic turbulence with the mechanical investment approach, we continue to see continued demand from investors in Beacon portfolios.

A WELL-RECOGNIZED APPROACH OFFERS A SOLUTION
Despite the uncertainty that this year presented, our investment philosophy and the dedication of our advisors remained a constant. We were humbled to have been recognized by well-known industry platforms with awards highlighting our approach to portfolio management and the hard work of Beacon advisors. For the third year in a row, we were listed on the CNBC FA 100 list which recognizes advisory firms nationwide that best help clients navigate their financial lives. We were also ranked in the 50 Fastest-Growing RIAs by Financial Advisor for 2022 and were named one of America’s Top RIAs from Financial Advisor Magazine.

Additionally, Morningstar, one of the best-known analysis and performance tracking organizations in our industry, has given our Vantage 2.0 and 3.0 portfolios the below rankings:

Vantage 2.0:
1 Year – 13th Percentile
3 Year – 4th Percentile
5 Year – 6th Percentile
10 Year – 5th Percentile

Vantage 3.0:
1 Year – 9th Percentile
3 Year – 13th Percentile
5 Year – 14th Percentile

Out of 367 other managers, our Vantage 2.0 and Vantage 3.0 portfolios both received five-star overall ratings.

We are proud to offer investors reliable solutions designed to perform in today’s volatile conditions.

From all of us at Beacon, thank you for your continued trust and belief in us and our approach. We look forward to achieving many great things in 2023 while helping you help your clients through the many uncertainties. We look forward to a happy and prosperous New Year together.

1https://www.google.com/finance/quote/.INX:INDEXSP?sa=X&ved=2ahUKEwiax9CApOj7AhXCmlYBHYrpAIcQ3ecFegQIHRAg
2Beacon Quarterly AUM Report as of September 30, 2022

We have exciting updates underway for the start of 2023! Beacon will soon offer another version of our monthly fact sheets that indicates live performance. We are also in the beta phase of testing for a digital account opening system. Stay tuned for more insight.

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