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Registered Investment Advisor
95 Broadhollow Road, Suite 102
Melville, NY 11747
(631) 923-2485
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Investment Newsletter - Q1 2022 |
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Greetings!
As we turn the calendar to 2022, we are of course constantly reminded that Covid is not done with us at all, and we could be down about that. However, when we think that where we were a year ago, it is good to have the perspective that we have come a long way. A year ago at this time the vaccines were just freshly approved, and for those that were looking for it, the process was not easy at the beginning, and most of the country was still in "lockdown". Now, less than a year later, the vaccine is plentiful in the U.S. along with boosters, lockdowns seem to be a thing of the past, and while many are still getting Covid, it is not as serious of a health issue as what we were experiencing a year ago for the vast majority of people. We all hope this year we continue on the trajectory of progress that we did in 2021. We wish everyone a happy and healthy 2022!
For our clients, as a reminder, we have moved to a new office, with a nice sized conference room to use for our meetings and updates. If you do not feel comfortable coming into our office, we recommend that we possibly set up a Zoom or teleconference call to update your planning numbers, especially if it has been more than a year since we have last done so. Please feel free to reach out.
Regarding the economy and the stock market, we give you our thoughts, specifically on the past quarter and outlook further below. If you would like, we also have a link to the 2022 Global Market Outlook by Russell Investments (click here)*, and to Vanguard's Economic and Market Outlook for 2022 (click here)*. *Please note, when you click, scroll and click the url underneath the Russell Investments and Vanguard picture, the pdf should download automatically.
In this issue of our Investment Newsletter:
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Our current investment topic is: Inflation Today - What Is It Really?
- A recent article that Landmark Wealth Management was quoted in the press: "Long Islanders share their 2022 financial resolutions".
- An overview of recent market activity, along with Our Perspective...
- A recap of the performance of major market indices from the past quarter
- Upcoming Economic Calendar
You will find past investment articles, by clicking the Articles tab above, or directly on our website, found under Periodicals.
If there is a topic of interest you would like to see covered in the future, please reply back to this email to let us know, or click here. Likewise, if you have any questions on this or anything else, feel free to reply back.
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Investment Topic
Inflation Today, What Is It Really?
For our investment topic, "Inflation Today, What Is It Really?", we give a high-level overview of the topic. To learn more, please click here.
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Recent articles where Landmark Wealth Management was quoted in the press
The past few years, Landmark Wealth Management has been quoted in the press for various articles. We have decided to start sharing these when they happen. If curious about past times we were mentioned, you can see it on our website under Articles > In The Press, or simply click here.
"Long Islanders share their 2022 financial resolutions"
From an article that was originally printed in Newsday this December, we thought you may find this story of interest: "Long Islanders share their 2022 financial resolutions".* To access this article, please click here.
*Special note - the article quotes us as stating having an emergency fund of at least three months worth of expenses. That is a bare minimum we would suggest for someone on a stable fixed income, and/or a as a starting point. Those dependent on an income that could be cut short, the recommendation is generally six months, and we might even suggest a year's worth of expenses depending on the circumstances.
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Our Perspective on Recent Market News and Activity |
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Our synopsis of the past quarter, a look ahead, and putting it all in perspective: |
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When we wrote “Our perspective…” a year ago, we all breathed a sigh of relief that 2020 was over and really looked forward to getting into 2021. Ironically, the sentiment by many, as we ended 2021 was quite the same as the previous year. In a way, it does make sense in that there is a tremendous amount of “Covid fatigue” that exists, and we clearly are not where we thought or had hoped to be in getting this virus under control as of yet. That stated, we must look through all the “noise” and look for the positives in life. Clearly the positive is that we learn more and more about this virus and treatment options are continuing to improve, and lockdowns look less likely going forward.
From a market perspective, there were a lot of positives. The overall markets finished their third consecutive positive year, and with averages that were higher than historical norms. As we often tell our clients, the stock market is positive about 75% of the time. The bond market is positive about 90% of the time. When you blend those two asset classes together and depending on the overall mix, you generally wind up with account values that are up in a positive way approximately 80% of the time.
It is important to note however that it does not mean three years positive, and then the fourth year negative. Coming off three positive years, it is important to note that. There are rare times where markets have been negative for 2 or more consecutive years, however with the key words being “over time”, market averages over a full market cycle tend to give you those historical returns which help one to grow their assets over the long haul.
When we say we must look at the positives, it should really be noted that even with Covid and the turbulence that the Omicron variant caused, the markets just finished with its’ third straight year of double-digit gains from the broad index and second in the midst of the Covid-19 pandemic. In 2021, the S&P hit 70 new highs. The Dow Jones Industrial Average and Nasdaq Composite gained 19% and 22%, respectively in 2021, sending the indexes to their best three-year performance since 1999. As you can see, markets are resilient, and you must be and stay invested at all times, to help ensure that your long-term plans stay intact. For those who sit in cash on the sidelines, or unsuccessfully try to “time” markets, more money is often lost while sitting on the sidelines than if you were invested, rode through a downturn and then the subsequent recovery.
So where do we see 2022 for the markets? Well, we all have our opinions, however if history is any guide, the markets will most likely do the complete opposite of what most will predict. Heading into 2022, the prevailing consensus is that there are some headwinds.
Some of the key concerns are we head into the year with a Federal Reserve that is looking to tighten and raise interest rates. While we can argue that it is needed and overall can be a good thing for more conservative investors so that they will be able to get some higher income on their bonds. Unfortunately, it does not come without some short-term pain as there is an inverse relationship between interest rates and bond prices. When interest rates go up, bond prices come down. Over time, lower yielding bonds will be replaced with higher yielding bonds in the portfolio, however there will be a price adjustment along the way.
We speak to many different Wall Street firms, and the consensus seems to be that 2022 will be a year with mid-single digit returns, or slightly below their historical average. That makes sense to us given less stimulus in the economy, rising interest rates, and a pandemic that is still not yet at its long-awaited end. Markets simply do not outperform their historical averages year after year, and corrections should be expected along the way.
It is important to remember, that in our planning conversations we have always used market growth rates that are lower than historical averages. When you combine that with Monte Carlo analysis, which looks at sequence of returns risk, our clients should know that we have already planned for lower-than-average market returns as it pertains to long term financial planning. If you do not know what we are referring to by this, then please let us know because it is of utmost importance to any financial planning conversation.
We would also caution the common forecast that 2022 will be a “stock-pickers” market, which most often comes from active managers who think that they can outperform the broad-based indices with their “brilliant” individual stock picks. Once again in what is a very common trend, in 2021 some 85% of active U.S. stock funds finished below the S&P 500 Index, which just happens to be our largest holding. In 2022, the stock market is likely to grapple with either higher short-term interest rates in 2022 or alternatively with a Federal Reserve that is even further behind the inflation curve, risking a higher peak for short-term interest rates in the future. Look for a 10-year Treasury in the range of 2-2.5% which is above the current 1.60% level.
As we enter our third year of this global pandemic, if you have put off meeting with us in person or via Zoom, please do not wait any longer. We welcome all conversations and meetings, and it is important that we update your planning numbers. As always, we are thankful for our clients and look forward to starting another new year hopefully full of health and prosperity for all.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
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Below is the Q4 '21 price return performance of some of the major indices: |
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On the Investment Horizon |
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Upcoming Key Dates on the Economic Calendar
- First Friday of each month: Unemployment report for the prior month, released at 8:30AM.
- Wednesday, January 5 - Federal Open Market Committee (FOMC) releases minutes of previous meeting at 2PM.
- Monday, January 17 - Martin Luther King Jr. Day: US Markets closed.
- Tuesday, January 25 - Wednesday, January 26: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
- Thursday, January 27 at 8:30AM - GDP, 4th quarter (advance estimate).
- Monday, February 21 - Presidents' Day: US Markets closed.
- Thursday, February 24 at 8:30AM - GDP, 4th quarter (second estimate).
- Tuesday, March 15 - Wednesday, March 16: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
- Wednesday, March 30 at 8:30AM - GDP, 4th quarter (third estimate).
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If you desire an appointment, have any questions on any of this material, or any other financial subjects may relate to your own financial circumstance, please reach out to us at the contact information below:
Sincerely,
Direct phone: 631-923-2485
This communication is from Landmark Wealth Management, LLC, a Securities and Exchange Commission Registered Investment Advisory firm. The information in this email is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax, legal, or investment advice from an independent professional / financial advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Information and use of materials contained in this email, including text and attachments, is confidential and is for the use of the intended recipient(s) only. If received in error, you are hereby notified that any dissemination, distribution, or copying of this communication, or any of its contents, is strictly prohibited. If you have received this communication in error, please reply to the sender and delete the original message and any copy of it from your systems. Be also advised that email communications are not secure. All e-mail sent to or from this address will be recorded by the Landmark Wealth Management, LLC email system and is subject to archival, monitoring, and inspection pursuant to securities regulations. Please direct any matters regarding this policy to info@landmarkwealthmgmt.com.
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Landmark Wealth Management, LLC
95 Broadhollow Road, Suite 102
Melville, NY 11747
(631) 923-2485
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