{"id":2027,"date":"2025-10-21T17:26:30","date_gmt":"2025-10-21T21:26:30","guid":{"rendered":"https:\/\/garandgestionprivee.ca\/may-2022-persistent-volatility-inflation-under-scrutiny-and-lessons-in-patience\/"},"modified":"2026-04-03T10:45:07","modified_gmt":"2026-04-03T14:45:07","slug":"may-2022-persistent-volatility-inflation-under-scrutiny-and-lessons-in-patience","status":"publish","type":"post","link":"https:\/\/garandgestionprivee.ca\/en\/may-2022-persistent-volatility-inflation-under-scrutiny-and-lessons-in-patience\/","title":{"rendered":"May 2022: Persistent volatility, inflation under scrutiny and lessons in patience"},"content":{"rendered":"<div class=\"elementor-element elementor-element-f960d9a elementor-widget elementor-widget-text-editor\" data-id=\"f960d9a\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">Looking at the final result, one might think that the month of May was rather uneventful, but we would be wrong. Like the rest of the year, the month of May was very volatile.<\/div>\n<div class=\"elementor-element elementor-element-dcb52e8 elementor-widget elementor-widget-theme-post-content\" data-id=\"dcb52e8\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n<p>After a sharp decline in the month, the US market, defined by the S&amp;P 500 index, had its best week since November 2020 in the last full week of the month. It thus ended a streak of 7 consecutive weeks of decline, the longest since the correction of the early 2000s.<\/p>\n<p>The excellent end of the month was mainly based on the expectation that the worst of inflation was behind us and that this would allow central banks not to have to be more aggressive with interest rate hikes. We are currently juggling a high level of uncertainty as many things are happening at the same time. Whether it&#8217;s soaring inflation, interest rate hikes, oil prices, the war in Ukraine, tighter monetary policies or slowing economies, everything is interconnected and there are a lot of factors to watch. It is important to understand that for the tide to turn in the markets, it is not necessary for all these factors to be resolved, but rather for more clarity that would demonstrate progress in the right direction. Markets are always looking far ahead and uncertainty is the biggest enemy, often more so than the problems themselves.<\/p>\n<p><strong><u>Inflation<\/u><\/strong><\/p>\n<p>Despite all the pessimism that currently dominates the newswires, there are still some positives. Lower inflation expectations, lower demand for goods and higher demand for services, increased capacity utilization at refineries, and lower job openings are just a few examples of factors that could have a positive impact on helping to reduce inflation. I attach some graphs at the end of this email for those who are interested.<\/p>\n<p>It is impossible to know in advance what will or will not materialize. Will higher gas prices cause people to travel less, especially in the summer months when demand is historically stronger? A drop in demand would eventually lead to a drop in oil prices, which would help lower inflation. Could the return to balance in demand between goods, which was rising sharply during covid, and services, which was falling sharply during covid, also help bring inflation down since less demand for goods would give supply chains a chance to gradually regain the upper hand? Could the decline in job openings, if it continues, help reduce wage growth that is also fueling inflation? Many unknowns on which we will have more clarity as the year progresses. We will have to be patient.<\/p>\n<p><strong><u>Fixed Income<\/u><\/strong><\/p>\n<p>As discussed in the previous comments, the fixed income market has had a very difficult start to the year following the drastic and rapid increases in interest rates. As a result, the traditionally more stable portion of portfolios that acts as a sort of &#8220;insurance policy&#8221; when markets are more volatile has not served its purpose. A positive sign in May was a return to a trend and more normal behaviour on the part of bonds. This is an encouraging sign that bonds can gradually return to their place as portfolio protectors in the future. The outlook for the next 12 months is much better than the outlook for the last 12 months for this asset class.<\/p>\n<p><strong><u>Time in the market vs timing the market<\/u><\/strong><\/p>\n<p>In closing, it is essential to understand that to be successful in the financial markets over the long term, it is the TIME invested that counts, not the TIME you invest. The distinction is very important because in the short term, the time you invest will have more influence on the return, but in the medium\/long term, it won&#8217;t matter at all. Let&#8217;s take as an example an investor who invested all his money in the U.S. stock market, represented by the S&amp;P500 index, on August 28, 2008. You&#8217;ll tell me that he&#8217;s probably the unluckiest investor, and in the short term, you&#8217;d be right. At the peak of the financial crisis about 6 months later, on March 9, 2009, investment would have fallen by about 47% (note that I am not talking about a loss, but a decrease). This means that in just 6 months, his $100,000 investment would have dropped to $52,853. It&#8217;s quite difficult at this point to take a step back and think long-term, but let&#8217;s say that the investor does it and decides not to touch anything. Today, the same $100,000 invested on August 28, 2008 in the S&amp;P500 would be worth $420,520 (as of May 31, 2022) for a total return of 320.5% or 11%\/year (data calculated with Refinitiv Workspace and Morningstar). A result that is all the more interesting when you consider that he has lived through the financial crisis of 2008, the &#8220;flash crash&#8221; of 2010, the US debt crisis in 2011, the occupation of Crimea by Russia in 2014, the oil crisis in 2015, Brexit, the missile crisis with North Korea between 2017 and 2018, the trade war with China in 2018, Covid in 2020 and the current decline in 2022. In short, the lesson to be learned is that <strong>there will always be reasons to be negative in the short term, but in the long term it will not matter<\/strong>.<\/p>\n<p>I believe that we are not done with volatility and that we will see more in the coming weeks\/months. Currently, it is very easy to find differing opinions from people in very high positions in the world&#8217;s largest institutions; Some say the worst is behind us, while others say it&#8217;s not over. The lesson is that no one will know when the worst is over until it&#8217;s done, and neither will I. However, what I do know is that the tide will eventually turn. Will it be in a week, in a month or in three months? No one knows. But as mentioned earlier, &#8220;timing&#8221; won&#8217;t matter when looking at these events in the future. In the meantime, we continue to monitor the positions in the portfolios and if we are still confident that these positions will perform well in the future and that they still have good growth potential, we let the storm pass and we hold on to them because it is the best thing to do.<\/p>\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone wp-image-2379 size-full\" src=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/SP500-28-aout-2008-au-31-mai-2022.png\" alt=\"\" width=\"1407\" height=\"353\" srcset=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/SP500-28-aout-2008-au-31-mai-2022.png 1407w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/SP500-28-aout-2008-au-31-mai-2022-300x75.png 300w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/SP500-28-aout-2008-au-31-mai-2022-1024x257.png 1024w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/SP500-28-aout-2008-au-31-mai-2022-768x193.png 768w\" sizes=\"(max-width: 1407px) 100vw, 1407px\" \/><\/figure>\n<p>Source: Refinitiv, S&amp;P500 between August 28, 2008 and May 31, 2022, $USD<\/p>\n<p>Some events planned for June:<\/p>\n<ul class=\"wp-block-list\">\n<li><sup>June 1<\/sup>: Bank of Canada interest rate decision (0.50% increase expected and confirmed)<\/li>\n<li>June 10: U.S. inflation data (8.3% year-over-year increase expected, 8.6% year-on-year increase confirmed)<\/li>\n<li>June 15: U.S. Central Bank decision on interest rates (0.50% increase expected)<\/li>\n<li>June 22: Canadian inflation data<\/li>\n<li>June 29: Core PCE data on US inflation: The Fed&#8217;s (US central bank) favorite measure to track the real impact of inflation<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Interesting charts<\/strong><\/p>\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-28f84493 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" class=\"alignnone wp-image-2381 size-full\" src=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/CA-inflation-actual-vs-forecast.jpeg\" alt=\"\" width=\"663\" height=\"445\" srcset=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/CA-inflation-actual-vs-forecast.jpeg 663w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/CA-inflation-actual-vs-forecast-300x201.jpeg 300w\" sizes=\"(max-width: 663px) 100vw, 663px\" \/><figcaption>Source: Refinitiv Datastream<\/figcaption><\/figure>\n<\/div>\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" class=\"alignnone wp-image-2383 size-full\" src=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/Depenses-et-prix-biens-et-services.jpg\" alt=\"\" width=\"703\" height=\"455\" srcset=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/Depenses-et-prix-biens-et-services.jpg 703w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/Depenses-et-prix-biens-et-services-300x194.jpg 300w\" sizes=\"(max-width: 703px) 100vw, 703px\" \/><figcaption>Source: National Bank Investments<\/figcaption><\/figure>\n<\/div>\n<\/div>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-2386 size-full\" src=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/unnamed-1-1.jpeg\" alt=\"\" width=\"1070\" height=\"317\" srcset=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/unnamed-1-1.jpeg 1070w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/unnamed-1-1-300x89.jpeg 300w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/unnamed-1-1-1024x303.jpeg 1024w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/unnamed-1-1-768x228.jpeg 768w\" sizes=\"(max-width: 1070px) 100vw, 1070px\" \/><figcaption>Source: Refinitiv<\/figcaption><\/figure>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-2388 size-full\" src=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/unnamed-2-1.jpeg\" alt=\"\" width=\"639\" height=\"561\" srcset=\"https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/unnamed-2-1.jpeg 639w, https:\/\/garandgestionprivee.ca\/wp-content\/uploads\/unnamed-2-1-300x263.jpeg 300w\" sizes=\"(max-width: 639px) 100vw, 639px\" \/><figcaption>Source: Refinitiv<\/figcaption><\/figure>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Despite a turbulent May, the markets are showing signs of balance. Patience and long-term vision remain the keys to success. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2027","post","type-post","status-publish","format-standard","hentry","category-non-classe"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>May 2022: Persistent volatility, inflation under scrutiny and lessons in patience - Garand Gestion Priv\u00e9e<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/garandgestionprivee.ca\/en\/may-2022-persistent-volatility-inflation-under-scrutiny-and-lessons-in-patience\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"May 2022: Persistent volatility, inflation under scrutiny and lessons in patience - Garand Gestion Priv\u00e9e\" \/>\n<meta property=\"og:description\" content=\"Despite a turbulent May, the markets are showing signs of balance. 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