Wondering what has been going on in the markets lately? Join Andy Stolz on a snowshoe at Suntop Lookout near Mount Rainier to get some tips on how investors should be thinking in 2022.
Well, it's the end of another quarter and another year. So it's time for our market review. Let's get to it.
Well, Happy New Year, 2022 is here. I don't know about you, but I'm ready for a new year and a fresh start. So hopefully you are too. Hopefully you're sticking to those New Year's resolutions that you made, and all of that good stuff.
But the end of a year, end of a quarter, I want to just take a quick minute to do a quick market review, talk about the numbers and what happened last year. And then after that, going to talk a little bit about 2022 looking forward and maybe some things to expect as an investor.
So stay tuned and let's do a hike.
So, we'll start with the quarterly market review. We'll just jump into it right here. So, starting with the global market review for the quarter. Overall, it was a pretty good quarter.
So starting with the US stock market, you can see quarterly return, 9.28%. That's actually a good annual return. So a really strong quarter. Moving on to an annual return, you see 25.66%. So a really strong quarter, really strong year for the US again.
Moving to international developed stocks, we see quarterly return of 3.14%, a little bit more of a normal quarterly number there. But 12.62% for the year. That's a great annual number
from international as well. So we've seen strong performance in US and international developed.
The story is a little bit different as we move to emerging markets. You can see, quarterly return there, -1.31%. Not the best quarter, but even gets a little bit worse as we move to an annual return. You can see the annual return is -2.54% for emerging market stocks.
So really, a good quarter. Emerging markets was the only negative number, also negative for the year, but US and international had really strong performance for the quarter. So overall, a great quarter for equities. So if you're 60/40, that's what that 60% equity portion might've done, or maybe what to expect from it.
So, moving from there, taking a quick look at real estate and fixed income. So as we look at real estate, we can see a really strong quarterly return there, 12.35% for the quarter, great numbers from real estate. And also annually you see just over 31%. So a really strong performance from real estate, even better than the US stock market.
Moving on to fixed income, 0.01% and 0.07% return. Yeah, not allowed to report there, not a lot of movement last quarter. On an annual basis, unfortunately, we saw some negative returns from fixed income. This is supposed to be the stability in your portfolio, but just a tough year for fixed income. Maybe some headwinds for fixed income in 2022 as well, but -1.54% for US and -1.40% for international.
So, a tough year for fixed income.
All right, so there's the market review. I'm gonna make three quick points for 2022 as far as what investors should be thinking going forward.
The first one's really basic. "Save more, have more." The amount that you save is going to have a whole lot more to do with the number that you have for retirement than the actual investments that you pick. So it always starts with saving, take care of your future self while still having fun today.
So 401(k) contribution amounts did go up this year, I'll put the 2022 401(k) contribution limit numbers here. If you're trying to max out your 401(k), it's January now, so maybe you can change your contribution if that makes sense for you.
So save more, have more.
So, the second point is, "Look Less, Smile More." If you think back on 2021, we had 252 trading days. 144 of them had positive returns, and 108 had negative returns. So if you look every day, there's a 43% chance that you'll have a negative experience that day because you had a negative return. So if you look at the percentage of days that are positive versus the percentage of months and years that are positive, it would suggest that the less often you look, the more likely you are to have a positive experience. So your experience as an
investor depends more on how often you look at your portfolio than it does on the actual performance of your portfolio.
So 2022 has some headwinds, could be some more volatility on the way, just something to keep in mind as we move through this year.
So the third and final point is, "This Isn't Physics." The statement of what goes up must come down, that's true in the laws of physics because of gravity. The markets can be different.
As an investor, if you think about that, anytime you invest in something, you're expecting an increase in value. It has a positive expected return. That's why you invest in it to begin with. So, if that's why you would invest in the greater market, you should assume that it would continually be reaching new all-time highs. So, a new all-time high isn't necessarily some nefarious thing that spells bad news for the markets going forward. It can actually be good news as well.
So, thinking back on 2021, we had 70 new all-time highs. Said differently, One day in four was a new all-time high last year. We had just one after another, after another. And it's a good thing you didn't get out after the first one, 'cause then you would've missed the next 69 new highs. So, it's just something to consider. A new all-time high isn't necessarily a bad thing.
Let's actually take a look at some data.
This shows market returns after new all-time highs. It also shows market returns after 20% market declines. As a long-term investor, a new market high is a short-term thing. Hopefully we'll have more market highs later. So, keep thinking long-term. And as you look forward after historical market highs, we've seen that markets have still done very well.
So, physics don't apply here.
So that sums it up. 2021 was a great year for investors, a little bit of a struggle in fixed income. 2022, it could be a little bit more of the same, definitely some headwinds for fixed income, but equity markets, there's maybe a unique economic backdrop, and we'll see some volatility, but there's nothing new there either. As a long-term investor, this year alone is considered a short term timeframe. So we'll see continued volatility, but what's important is building the right portfolio from the start, like always, and just sticking to it.
So there you go. Thanks for watching. If you have any questions, feel free to reach out, we're here for you.