2021 Year in Review
This year was supposed to be better than 2020. To be sure, in some ways, it has been. For example, I am grateful to have been vaccinated in the last year. But maybe it would be safer to say 2021 has been different.
If your bingo card or the images in your crystal ball had Meme Stock Frenzy, Capitol Riot, Non-Fungible Tokens, Blocked Suez Canal, Facebook becomes Meta, Afghanistan Collapse, Squid Game, or Omicron Variant, congratulations. I didn’t see any of those coming.
As of this writing, the stock market (measured by the S&P 500) is up over 22% for the year. I didn’t see that coming either. Those of us who would try to time the market had countless reasons to fear a stock market correction in 2021. Make no mistake, there is a correction coming. There always is. It’s the nature of markets.
But as I have been reminded many times this year, the market climbs a wall of worry. Sitting on the sidelines in cash this year would have been costly. While missing above-average investment returns, inflation, at levels not seen since the 70s, ate your spending power right out of your pocket.
Inflation has been painful in many ways this year. Quick refresher: inflation occurs when too much money chases too few goods. COVID-19, cheap money, and government policies have challenged labor markets and wrecked supply chains. What did you spend the last time you were at the gas pump?
But is it all bad?
This same excess of money has found its way into real estate, stocks, cryptocurrencies, and art–driving up prices just about everywhere you look. If you were an owner of an asset, most likely you’ve seen it appreciate this year due to these same forces.
What lies in store for 2022?
I certainly do not know. What I do know is that good financial planning will remain my focus. Keep your long-term money in long-term investments and keep your short-term money available to support your needs. That’s the key. Even in the face of a future correction, owning a well-balanced portfolio is the best, most efficient way to beat inflation over the long haul; meet your goals and maintain financial peace of mind. My only prediction for 2022 would be that any short-term fluctuations or unforeseen events shouldn’t derail a good financial plan. If you’d like to examine your situation going into the new year, let’s find a time to talk.
