Page 6 - Equity Investing Through Business Cycles

Investment Team Value Add Over the Years:

2022

2022 was the most challenging year for investors in more than
a decade. Multiple headwinds impacted the economy and the All financial success
markets. 40-year high inflation, historically high federal comes from acting on a
reserve rate hikes, weakening sentiment, the Russia/Ukraine plan. A lot of financial
war, and China's continued lockdowns all led to the longest failures come from
bear market for equities since 2008. Cryptocurrencies, growth reacting to the market.
stocks, and NFTs shed 90+ percent as individual investors
learned investing in this environment is not always as simple -Nick Murray
as prior years have made it seem.
At Pacific Capital, we:
Aggressively negotiated margin rates with our custodian, Charles Schwab, and
successfully lowered rates across all client accounts, resulting in lower margin costs
Generated alpha through portfolio changes including an allocation to consumer staples,
shortening bond duration, and taking advantage of historically higher yields
Participated in Schwab Impact, an event that connected us with greater investment
ideas and tools to potentially benefit clients
Attended a variety of meetings on our clients' behalf regarding current private
investments and potential private investment opportunities
Tax loss harvested, where possible, to decrease tax burden
Avoided investing in cryptocurrency and growth stocks that have seen losses of 70-
100% YTD
2021

2021 was the sixth-best year for US equities since 1990. It was a year of uncertainty and
anticipation, of hopes for a return to a degree of normalcy following the onset of the COVID-
19 pandemic in 2020. And it was a year that showed, again, the difficulty of making
investment decisions based on predictions of where markets will go.

At Pacific Capital, we:
Increased our allocation to TIPS, which are inflation protected securities, in anticipation
of the continually increasing inflation rate
Decreased our allocation to emerging markets
Made tactical trades in anticipation of increased volatility in markets
Completed courses on digital assets to better understand the emerging cryptocurrency
space
Formalized our Investment committee process

2020

The year 2020 proved to be one of the most tumultuous in modern history. It was
characterized by sharp swings in both equities and fixed income. The S&P 500 surged almost
65% since its March low and finished the year achieving double digit positive returns.

At Pacific Capital, we:
Established hedge positions for tail risk events surrounding COVID
Maintained our long-term view, and stayed invested in equities during a historical
drawdown and the subsequent recovery while others panic sold
"Timing the market is a fool's game."

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