January 2022 Market Update

It is a new year full of New Year’s resolutions that are usually broken within 60 days, according to the U.S. News & World Report.

Has this ever happened to you?

Recently our family went through some changes that threw off our routine. I stopped exercising regularly. I knew things were not heading in the right direction, but I would get around to it ….. someday. Six months later and, well, more than six pounds later, I finally decided to get back into the routine.

• Step 1 – Contact a professional (when you are my age, you should not work out as you did in your 20’s.)

• Step 2 – Develop goals and a Plan

• Step 3 – Execute the plan CONSISTENTLY

• Step 4 – Measure, Evaluate and Adjust if necessary

Step four is coming up, I already feel better, and I am confident I am down a few pounds. It is working because I have a system, a routine that works almost in automation. The problem with most New Year’s Resolutions is that we often never get past the idea phase to planning and consistent execution.

Outside of your physical health, your financial health is likely the most essential thing in building your best life now and in the future. Why not make your financial plan your New Years Resolution and follow those same steps listed above!

In this month’s update, we will cover:

• Volatility – it is back!

• What is happening with the U.S. Consumer?

• Will we see a massive “tech” correction?

Volatility – it is back!

As we warned in earlier additions of our monthly update, volatility is back! A daily one percent move in either direction is now commonplace in the stock market. So, What is going on? Much concern over the most recent variant of COVID “omicron,” seemingly runaway inflation, and fear over what and when the Federal Reserve may do something to combat inflation are all significant parts of the shorter-term puzzle. We also see much of the short-term money that enjoyed relatively easy gains in 2020 heading for the exits after a more challenging 2021.

We had expected the volatility, but it did come a bit earlier than expected.

We anticipate this kind of market movement could continue through at least the first quarter of next year. Given that rates are likely to rise during 2022, we expect pressure on longer-term bond holdings. Shorter-term bond holdings and cash are providing yields well below the current inflation rate leaving many investors, especially those relying on the income from their investments, frustrated and confused.

The marketplace has been innovative and provides answers to these frustrations. Still, if investors are not willing to adapt to this changing marketplace, they may end up putting themselves at greater risk than they realize.

What is happening with the U.S. Consumer?

During October, the consumer was alive and well, with retail sales growing 1.8%.

The November numbers were not as strong growing at only .3% versus a forecast of .8%.

If you subtract out gasoline sales, there was a decline in consumer spending for the month of November.  Some blame this on the spike in prices/inflation, while others speculate that it was caused by concerns regarding the supply chain crunch, causing businesses and consumers to buy early and in larger quantities anticipating more supply issues. I like to point out that one number a trend doth not make and would point to the continuing and growing trend of gift cards which typically are not recorded as sales until they are used, usually in January and February. Now I think gift cards are not as much fun, but I guess I am just old school that way!

I do believe that inflation, combined with supply chain issues and the threat of increasing rates may make large purchases like houses and automobiles less affordable.  These rate increases may dampen retail sales at some point. However, I do not think that is coming as soon as some believe.

Housing starts continuing to grow, and if that trend continues, folks will be out buying things to furnish and customize those houses. Never underestimate the ability of the American Consumer to do their job and remember the consumer makes up about 2/3rds of the economy.  Combine this with the infrastructure spending bill passing and I am not as concerned for the economy in 2022.

Will we see a massive tech correction?

I have received this question from several clients over the past month. I first want to point out that the tech or growth company correction may have already happened. Many companies in this category are down around 30% or more.  Add to this the, perhaps counterintuitive idea that the infrastructure bill should benefit many of these high-growth tech companies and, in our opinion, you have a bullish case for a large portion of this segment of the market in 2022.

As I see it, the correction that some, including myself, anticipated for the new year may have already happened as the Federal Reserve told us of their plans to raise rates and begin quantitative easing. The market tends to trade in advance of what it collectively “thinks” will happen, which is why we are NOT proponents of market timing. We encourage investors to focus more on the longer-term future and merely glance in the proverbial review mirror as we help clients navigate the markets.

For those who are technically curious, the charts show the dip in the tech/growth stock market in the fall. This past month’s price action seems indicative of consolidation in this market sector, which often indicates a move higher near term. Again, the near term is not where we focus. We focus on long-term investing and building portfolios that build and support the life you want.

Define your outcome and allow a skillful artisan to help you create it for you.

Please remember that this note is our opinion from a broad perspective and is not personal investment advice.

Contact us to book John to speak at your next event.

John makes investing, economics, and financial planning fun and enjoyable with his real-life stories while providing valuable tangible information listeners can use immediately to make massive positive changes in their future and their lives right now.

For individual advice and more information about some of the changes happening in the market and economy, schedule a no-cost call directly with John Browning by CLICKING HERE.

We are also happy to provide you with a copy of our Amazon best-selling book Build a Life, Not a Portfolio; A Guide to Your Financial Future Based on Your Values.

Additionally, you can tune into our weekly Building Your Life Podcast and search for topics of interest.

We continue to have one goal; to help you build a life you love supported by a portfolio that fits your specific needs.

Talk soon,

John

Phone: (312) 372-5000

Email: info@advocacyinvesting.com

John Browning, MBA and CSA®

* Securities and investment advisory services offered through Guardian Rock Wealth™ Investment Management Inc. (GRWIM). GRWIM is a wholly owned subsidiary of Guardian Rock™ LLC. Neither of these entities provides tax or legal advice.

Nothing in this communication should be construed as advice about investments for you personally, and past performance is no guarantee of future results. Investing is not appropriate for everyone. There is a risk of loss associated with investing in the markets. No representation or implication is being made that using any methodology or system will generate profits or ensure freedom from losses. Please remember that investing carries risk. Guardian Rock Wealth™ LLC and its affiliates are fiduciary investment advisors. Please consult with another experienced, qualified investment advisor or us before making any investment decisions and/or trying to implement any of the strategies and tactics we may discuss in any of our publications.