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January 2022 Monthly Outlook - Hindsight is 2021

January 2022 Monthly Outlook - Hindsight is 2021

Happy New Year

 

"In the business world, the rearview mirror is always clearer than the windshield." - Warren Buffett

 

This observation is equally true in the investment world.

In 2021, we saw the worst performing areas of the market from 2020 do the best in 2021, while the best performers from 2020 did the worst in 2021.

Hindsight is 2021

Source: Bloomberg and Goldman Sachs Asset Management. As of December 31, 2021

 

In addition to the broad asset categories above, styles & factors exhibited the same results.  In 2020, Momentum was #1 and dead last in 2021, while Value was dead last in 2020 and #1 in 2021.

2021 saw a transition from a vaccine-fueled and policy-led recovery to a more fundamentally-driven expansion. Market performance remained fairly strong, even amid supply chain disruptions, meme stock mania, and ongoing virus concerns.

The new year begins with the US economy on sound footing.  True, the Covid-19 pandemic continues to present challenges as we start 2022.  Even so, consumers have proven resilient in the face of these health concerns, getting back to traveling and continuing to spend at a brisk level. Household net worth is at an all-time high, while debt service ratio (debt payments as % of disposable income) is at a 40 year low.  While interest rates are likely to rise during the year, they remain quite low on a historical basis.  Unemployment is falling and wages are rising. Inflation is a major concern, especially as it exacerbates the income inequality problem we already have. We have Congressional elections in November and ongoing geo-political risks with Russia and China.  And let’s not forget Mother Nature continues to wreak havoc across the country.

In 2022, we expect growth to moderate, monetary policy to prioritize taming inflation, and fundamentals to continue driving returns. We expect volatility to remain elevated.  We continue to favor equities over bonds, and the US over International.

It will be interesting to find out how clear our windshield will be this year!`

We appreciate your confidence in us and will do our very best to help navigate this new year and whatever it may bring.

 

 

January Calendar of Events   (comments and additions for future months are always welcome)

  • January is National Blood Donation Month.  Let’s all give a pint to help another.

 

January   5th                    My granddaughter Isys turns 16.  I must be getting old.

January 10th                    My wife Elle’s birthday.   

January 15th                    12th anniversary of my independent practice – thank you to all my great clients.

January 17th                    Martin Luther King Day.  Let’s pray for more racial tolerance and understanding.

 

 

Sources: Value Line, Bloomberg, Goldman Sachs

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

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