Halfway through the year, major indexes on the US stock exchange recorded their worst first half of the year performance in 50 years. Concerns about record inflation, the Russian and Ukraine crisis, and interest rate hikes plagued investors’ sentiment, with the S&P 500 down -21% and the Rise stock portfolio returned -24.3%

Meanwhile, in spite of declining home sales in the US over the past month, our real estate portfolio returned an impressive 6% for the quarter. Going forward, we expect the markets to remain mixed, and investors should be focused on the long term.

Market Overview – Bear Market Halfway  Through 

Halfway through the year, It’s not been smooth sailing for investors on the US stock exchange as major indexes recorded their worst first half-year performance in 50 years. The S&P 500 is down 21%, while the tech-heavy NASDAQ  is down 30%, as stocks widely held by investors in the market are down by 50% or more this year, especially those of fast-growing companies.  

Several concerns have been responsible for sending investors’ confidence in the stock market downwards this year, including inflation, interest rate hikes, the war in Ukraine, and declining consumer confidence in the economy. However, monetary authorities maintain that inflation in the US is transitory and that supply chain bottlenecks will ease. But this has not been the case sending stocks further downwards. 

So far, Investors are greatly concerned about the Federal reserve aggressively raising interest rates and tipping the economy into a recession. Also, the war in Ukraine has led to global oil prices selling above $100 per barrel since it started forcing scarcity which has led to a drastic increase in energy prices. 

Rise Portfolio 

The Rise portfolio (Fixed income, Real estate and Stocks)  recovered nicely from previous losses as solid real estate returns and improved performance from our stock portfolio ensured losses were limited to a negative -3.64% at the end of the second quarter.   

Stocks Portfolio

In the past quarter, the Rise stock portfolio ended on a negative note returning -8.6%. Our improved portfolio hedges, and an understanding that the Federal Reserve Bank needed to raise interest rates to keep inflation from growing, helped our portfolio from a further slide downwards. 

We took advantage of the downturn in the market to add to our positions in Meta (Facebook), Alphabet (GOOG), Berkshire Hathaway, and S&P 500. We also added card issuer Marqeta (MQ), financial ratings companies S&P Global (SPGI) and Moody’s to the portfolio, while removing shares of Snap Inc. 

Despite all the commotion on the market, our defensive positions in Apple, Exxon Mobil, Microsoft, Google, Trade Desk, and Berkshire continue to bring balance to our portfolio through these periods of high uncertainty. 

Real Estate Portfolio

Our real estate portfolio for the quarter returned 6% despite declining home sales in the US over the past months. Record home prices have slowed the buying frenzy. 

During the quarter we tested out our Airbnb short-let rentals strategy, and it has returned 18% so far and we are doubling down in the coming weeks. We have also added more single-unit houses outside of South, and North Carolina as increasing rent rates in the US continue to favor our portfolio to deliver strong returns. 

Expectations for the rest of the year

Going forward, we expect the stock markets to remain mixed if recession fears and record inflation persist. We’ll continue to invest as the bear market throws out attractive valuations.  Also, real estate and fixed income markets remain strong even with the economic turbulence and we are doubling down on our bets in these assets to keep growing the portfolio.