Year-End Investment Recap and 2022 Outlook
January 10, 2022
By Michael Moreland
Vice President - Investments
It’s said that the most dangerous phrase in the investment world is, ‘This time it’s different’. Normally, you hear it used to justify continuing a course of action that seems contradictory to current facts and market history. A wise investor is guided by history and changes his or her actions to reflect the probability that even if history doesn’t repeat itself, it will likely rhyme (a tip of the hat to Mark Twain).
So what are today’s facts? Interest rates will rise in 2022 (they’ve already started to do so – most intermediate term rates are up about a quarter of a percent in the last month). Inflation has risen far beyond the Federal Reserve’s expectations – and late last year the Fed abandoned its view that higher inflation was transitory. Labor shortages are spurring wage pressures not seen in decades.
For the most part, equity investors have had the ‘wind at their backs’ in the form of low interest rates and low inflation for some time. No more – but this does not mean the end of positive results for the markets. It does suggest – based on history – the outsized gains of recent years will be fewer and farther between going forward. The best portfolio structures of the recent past will likely not repeat.
That’s the theme of our attached Winter 2022 Economic & Market Commentary, found below. And, for more detail on 2021 results (spoiler alert – they’re strong!) and a brief outlook for the year ahead, take a few minutes to watch our quarterly Investment Review and Outlook.
As always, thank you for your confidence in our services. Doing the right things for you, the right way, matters to us.