Market Update | 4th Quarter 2021

December 15, 2021

2021 has been another great year for our investors. The U.S. stock market (S&P 500 Index) has increased considerably as companies continue to recover from the COVID-19 pandemic and the re-opening trade. Low interest rates and improving company earnings have helped to drive U.S. stocks to new highs. Unfortunately, international markets (MSCI ACWI ex U.S. Index) have not done as well as U.S. stocks as international markets have struggled to recover from COVID-19 and China has introduced sweeping regulatory changes. The bond market (U.S. Aggregate Bond Index) has been negative all year and is expected to produce a negative total return for the first time since 2013. As we've mentioned in the past, historically low interest rates and inflation fears have impaired bond investors and this year has been a great example of how being "safe" can sometimes hurt investors.

As we head into 2022, we believe U.S. stocks will continue to perform well and international stocks will likely rebound but bonds will potentially struggle as interest rates normalize. We will be watching inflation and tax reform closely and will make adjustments to client portfolios accordingly. While these are concerns to be aware of, we don’t expect any major surprises. There will always be ups and downs in investing but we are here to help our clients navigate markets and reach their long-term goals. In addition, we will be using more non-interest rate sensitive investments in our bond portfolios. We expect that in 2022 some of the best total return and risk-adjusted returns will be in non-traded bonds (private) and non-traded equities (private). To that end, we will continue to migrate toward these areas and look to derisk prior to 2023.

Thank you for your business and friendship. Have a great year end!