The Eagle’s Eye July Client Letter: A Rocky First Half

The Wall Street Journal summed up the first six months of the year with a simple but telling headline: S&P 500 Posts Worst First Half of Year Since 1970. (The Wall Street Journal) Morningstar said the Dow’s performance was the worst since 1962.


Table 1: Key Index Returns




Dow Jones Industrial Average



NASDAQ Composite



S&P 500 Index



Russell 2000 Index



MSCI World ex-USA*



MSCI Emerging Markets*



Bloomberg US Agg Bond TR USD



Source: Wall Street Journal,, MarketWatch, Bloomberg

MTD returns: May 31, 2022—June 30, 2022

YTD returns: Dec 31, 2021—June 30, 2022

*In US dollars


In part, it’s a timing issue since both indexes hit their respective peaks in the first week of 2022 (St. Louis Federal Reserve data for the S&P 500 and the Dow).

Timing issues aside, stocks have tumbled since hitting all-time highs, and the S&P 500 Index has shed 23.6% from its January 3 peak to its June 16 trough, which officially lands us in a bear market.

The stock market is considered to be in a bear market when the broad-based index falls 20% from a prior peak.

Since 1957, there have been 13 periods when the S&P 500 has lost 20% or more over six months, according to CNBC. That averages out to about one such decline every five years. In other words, it’s not that unusual.

Six of the seven worst sell-offs centered around the 2008 financial crisis, ranging from losses of 29.4% to 42.7%. The outlier occurred in 1974, when the S&P 500 shed 32% over a six-month period.

Today’s market weakness shares little in common with conditions during 2007-2008, when a housing bubble fueled by weak lending standards and massive speculation nearly brought down the financial system.

While housing prices have soared and bubble talk abounds, bank capital standards are much stronger today and lending standards have tightened considerably since the housing bust. Moreover, the problem isn’t too many homes. It’s just the opposite: too few homes in too many locales.

But we can draw parallels to the early 1970s.

That 70s show

In 1972, the Consumer Price Index soared from an annual rate of 2.7% in the middle of 1972 to over 12% by the end of 1974, per St. Louis Federal Reserve CPI data.

In response, the prime loan rate leapt from 4.75% in early 1972 to a peak of 12.0% in July 1974 (St. Louis Federal Reserve). 

Today, we don’t talk much about the prime rate. Some loans still track the rate, and it is heavily influenced by changes in the fed funds rate, which gets much more attention.

Nonetheless, while the roots of inflation in the 1970s do not mirror what we see today, we do find some similarities, including ultra-easy money in the early 1970s, a lack of fiscal discipline, and soaring oil prices tied to the 1973-74 OPEC oil embargo.

The U.S. is not as dependent on foreign sources today and much greater fuel efficiency mitigates some of the impact, but rising gasoline prices are playing a role in the rise in the CPI, which hit 8.6% in May (U.S. BLS).

An oil embargo, soaring energy prices, and a sharp rise in interest rates contributed heavily to a recession that began in late 1973 and lasted until early 1975, according to the National Bureau of Economic Research (NBER).

Some commentators believe we are already in a recession. And while there are parallels between then and now, no two periods are exactly alike.

The S&P 500 Index has entered a bear market, which typically signals a recession. With the exception of the one-day market crash in 1987, we must travel back to 1966, when investors lopped 22% off the S&P 500 Index, but a recession was avoided.

Today, Fed Chief Jerome Powell continues to talk about the importance of getting inflation under control. And the Fed seems to be in no mood to veer from its inflation-fighting course, even if it means a recession.

But a recession is not a foregone conclusion. 

Although economic growth has slowed, consumer confidence is down, and a decline in Q2 GDP is on the table, job growth has been robust, layoffs are low (though they have ticked higher), and consumers are splurging on travel and other services that were out of reach in the pandemic. 

Furthermore, Moody’s Analytics argues that plenty of stimulus cash remains in bank accounts, which could support consumer spending, and typical signs of rising loan delinquencies have yet to materialize (St. Louis Federal Reserve).

Final thoughts

We won’t try to pinpoint a stock market bottom, and today’s economic fundamentals have created stiff headwinds for equities.

We know market pullbacks and bear markets are inevitable, and we recognize they can create unwanted angst. We also know that an unexpected, favorable shift in the economic fundamentals could fuel a sharp rally since sentiment today is quite negative.

As we have seen from over 200 years of stock market history, bear markets inevitably run their course and a new bull market begins.

We saw that after the 2008 financial crisis, and we saw that after the Covid lockdowns led to a swift bear market and a steep but short recession.

We also saw stocks rally from the lows of the 1974 bear market.

We know times like these can be difficult. If you have questions or would like to talk, we are only an email or phone call away.

Should you consider a financial caregiver? 

Age and poor health can quickly impair a person’s ability to deal with the life’s many issues, including money.  There are many avenues you may decide to take for a loved one (or you may recognize that you desire some assistance yourself). Below we cover a variety of arrangements for help at various levels of need and formality.

Also note that laws vary from state to state, but here we look at some general guidelines. As with any legal issue, please consider consulting with an attorney that specializes in such matters if and when you are making these decisions.

Informal financial caregiving

If you have an elderly relative who is need of help, yet is still highly functioning, one option is to appoint a conversation partner. This allows a trusted friend or relative to oversee someone’s finances. He or she could receive duplicate bank and brokerage statements and join the elder person when they visit their financial advisor.

You could also consider appointing a trusted contact person that someone’s advisor or bank can reach out to in the event of certain circumstances, such as suspected fraud.

Another option at this level is to establish a convenience account.  This is not a joint account, but it lets an assistant help an individual deposit funds, withdraw money, and write checks. At the account owner’s death, the helper will not receive the funds in the account. But there are pitfalls to these accounts, as we’ll discuss below.

Formal financial caregiving

You may formally establish a joint account for someone who needs assistance with their financial affairs, but there are downsides this. Yes, the helper can quickly pay bills and manage financial affairs, but they could also steal from the account. Creditors of either person could access the account, too.

Joint tenants with rights of survivorship allows the survivor to take ownership of the account. This could quickly cause conflicts with heirs and thwart the wishes of the deceased.

Can you set up the account as tenants in common? That is a possible solution, as the assets then would pass to the estate of the deceased and not the financial caregiver named on the joint account.

A power of attorney gives someone the legal authority to make decisions about an individual’s finances and/or property.

Might an older or infirm person need a guardian? If a person doesn’t have a power of attorney, a court can name a guardian or conservator to manage their finances and health care decisions, if the court decides they are unable to manage decisions by themselves.

A trustee is given authority only over assets that are in a trust, such as a revocable living trust. Like a will, the trust will stipulate who receives the assets in the trust when the owner dies.

You might find yourself in the role of court-appointed guardian over someone in your family. Such guardians, conservators and trustees are considered fiduciaries. It’s a high standard. It means the financial caregiver must manage a person’s finances for that person’s benefit. They promise to will be acting on the other person’s behalf and always must put that person’s interests first.

The fiduciary standard includes:

Carefully managing the person’s finances

Keeping their finances and property separate from the caregiver’s own finances

Always maintaining good records, including recording the reason for any payment in the memo field of the check

In addition:

You cannot borrow from the account.

Are you being paid? Do not pay yourself by withdrawing from the account. Have another person write the check for payment.

If you fail to meet the high standards of a fiduciary, you could be removed, sued, forced to repay money, or even have criminal charges brought against you.

Financial exploitation and elder abuse

Unfortunately, sometimes those appointed to care for the elderly will take advantage of them. Here are some of the signs to watch out for with the older people among your family and friends.

An outside party, friend, or close relative notices or believes that some money or property is missing.

Excessive gift giving suddenly takes place.

The person whose finances are being managed says that some money or property is missing. 

There is a sudden change in spending or savings. This might include heavy ATM usage, large unexplained wire transfers, purchases of items that don’t seem necessary, bills that go unpaid, names are added to bank and brokerage accounts, or changes in beneficiaries are made without explanation.

A relative, caregiver, friend, or someone else blocks visitors or phone calls, or seems to be controlling decisions.

Questions you might ask before naming a caregiver

As you think through persons who might fit the role of financial caregiver, ask yourself or the person who is going to be assisted:  Am I comfortable sharing my wishes with them? Will they carry out my wishes? Do I trust this person? Will they act in my best interest? Will they manage my affairs correctly? Will they keep proper records and keep their money separate from mine?

Appointing a financial caregiver is not a responsibility that should be taken lightly. Choose the right person. If you answered “Maybe” or “No” to some of these questions, consider asking someone else. (Sources: Consumer Financial Protection Bureau, AARP)

If you have additional questions, we’d be happy to speak with you. That’s what we’re here for. Should you have a family member or close friend who is unhappy with their financial advisor or who is simply wanting a second opinion on what they’re doing, we would be honored to visit with them.

Thank you for the trust, confidence, and the opportunity to serve as your financial advisor. 


Best Regards, 




Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.


The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. The MSCI ACWI ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries*. With 6,211 constituents, the index covers approximately 99% of the global equity opportunity set outside the US. The MSCI Emerging Markets is designed to measure equity market performance in 25 emerging market indices. The index’s three largest industries are materials, energy, and banks. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of William Y. Rice III and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee

that these statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does

not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion. Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor for more information.