Piedmont, CA

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Piedmont, CA

by: ALISON VAN DYKE

FIRST AND MAIN FINANCIAL

(510) 601-1935

Oakland, CA | East Bay; Q4 2021 – Will Inflation Slow Down Markets in 2022?

2020, the year of the start of the pandemic, saw some phenomenal performances in the stock market with our best fund that year (domestic small profitability) being up almost 60%. That performance was on the heels of a 37.48% gain in 2019. ‘The market can’t go up every day,’ I always respond to one of my original clients when he mentions a big down day or a volatile patch for stocks.

We’re programmed to fear loss and most of us have to go out of our way to celebrate wins. Small domestic profitability stocks (and emerging markets profitability) lost a little ground in 2022 which looks relatively poor compared to much of what we own with our clients, but when we look back a few/many years we know why we own various baskets of stocks. Each basket of stocks we own is highly likely to have its own day in the sun, we just don’t know when.

Domestic small value stocks made over 38% in 2021 (last year’s winner). This is a basket we often point to when explaining one of the benefits of diversification as the fund we most commonly use to represent this pocket of the market has beaten the S&P 500 by 236% since its inception in March of 2000.

Last year, overall, was quite good based on historical norms. And while much of the world doesn’t seem to make much sense much of the time these days, at least according to the news, the global economy continues to advance and with it the relative wealth of most people.

As I’ve written recently, inflation has picked up substantially which will necessitate a reduction in the supply of money by our Federal Reserve Bank. Markets started grinding a bit several months ago but have yet to show signs of real and sustained weakness.

We don’t know how increases in interest rates will play out, and lacking the ability of anyone, or any machine, to determine the future we’ll have to see how it goes as speculative efforts can cause permanent damage. Our clients’ portfolios are built for their circumstances and liquidity needs.

If your circumstances have changed please let us know.

As always, we appreciate the trust you put in us to manage your investments. We are always available for a conversation should questions arise or you simply desire to connect with us for a few minutes to just say hello.

Sincerely,

Erik S. Wolfers, MBA, CFP®

 

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“Best Financial Advisor in Piedmont, CA”

Top Rated Local Financial Advisor / Planner

East Bay Area: Piedmont, Oakland, Berkeley, Alameda, Orinda, CA

Recent

“Best Financial Advisor in Piedmont, CA”

Top Rated Local Financial Advisor / Planner

East Bay Area: Piedmont, Oakland, Berkeley, Alameda, Orinda, CA

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