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THE PAST AND THE FUTURE Thumbnail

THE PAST AND THE FUTURE

As we begin this new year and take time to think about what lies ahead, we reflect on what has happened and what we can learn from the past.

Please use this link to an article, Market Review 2021: A Recovery Amid Challenges, that provides facts and figures about what happened last year.

As you will see there were loud noises coming from the moving parts that make up your whole portfolio, especially whichever ones made headlines at any given time.

Heuristics

This is no surprise. To cope with information overload, we engage in what behavioral psychologists refer to as heuristics. These are rules of thumb, or mental shortcuts that take us past what seems inconsequential to our survival. They let us focus instead on the scariest snakes, and lowest-hanging fruit we can find. 

Heuristic thinking has worked wonders for us; helping us survive when our physical safety was at risk. But as investors, we end up overreacting to the most exciting or alarming news, and overlooking the less obvious evidence on how to create financial stamina.

Market Hype

Consider your quarterly reports in this context. In terms of fruitful investing, 2021 markets offered a bumper crop of seemingly easy pickings. Crediting “a highly speculative, risk-complacent market driven by a combination of near-zero interest rates, abundant capital and a healthy dose of hype,” Financial Post columnist Tom Bradley summarized the year as follows: “[W]e’re at a point in the business cycle when the disc jockey is playing Shout by the Isley Brothers and investors can’t stop dancing.”

  • The Wall Street Journal observed how low rates and busy investors “helped the S&P 500 close at a record 70 times this year, more than one-quarter of all trading days … and pushed the index up 27% in 2021.”

  • Morningstar reported that 2021 was also a banner year for companies going public, driven largely by SPACs going public at “more than 5 times the number from the year before.”

  • Traditional and thematic ETF launches were popular as well. Morningstar reported: “As of Nov. 24, a record 406 new exchange-traded funds were launched in 2021. … The top 100 are the Swiss Army knives of the ETF world. … [But] There were plenty of suspect newcomers in the crowd in 2021. A common thread among many of them is that they prey on investors’ impulse to chase what’s hot.”

  • From options trading, to IPOs, to tech stock bets, one aggressively active investment company president declared 2021 as “the year of the risk asset. … Anywhere there was risk and an opportunity for larger returns, we saw that pay off in spades.” 

Investor Fears

On the flip side, there’s been no lack of attention to the ubiquitous snakes in the grass. Will inflation rage in 2022? What if the Federal Reserve fulfills its promise to wind down the economic stimulus programs—the ones that have left markets awash in cash—and aggressively raises interest rates instead? Will higher taxes happen? If so, how will they impact your financial, retirement, and estate transfer plans? What about coronavirus? Climate change? China?

 If you’re just looking at the parts, good and bad news alike seems equally difficult to process. You know each piece contributes to your overall plans … but how?

How We Help

That’s where we come in. We’re here to help you discover the expansive planning space found between the extremes of exuberant and alarming news. 

Our process begins with your financial plan which serves as the foundation for your investment policy statement—tailored to your life’s goals, your timeline, your tastes and aversions. Your plans plus an evidence-based strategy advise your well-structured, globally diversified investment portfolio. We build your “whole” to deliver a measure of the market’s most promising rewards, while protecting you against its greatest risks. Then, because nothing ever stays the same for long, we regularly revisit your plans and portfolio, to help you incorporate any relevant news and disregard the squeaky wheels.

 If we humans never took any shortcuts between discovering and reacting to breaking news, perhaps we could be less disciplined about it all. Instead, all evidence continues to confirm: Each year, each quarter, each day delivers fresh fodder in which seeds of doubt can sprout. Until the day you know exactly what the future has in store, we will help you make sense of the years ahead.

I hope you find this helpful and welcome the opportunity to discuss the recent market events or any others of interest or concern to you. As always, please share this information with someone who might be in need of financial advice.

If your investment plan no longer reflects your goals or if you're interested in creating a plan to achieve your financial goals in 2022, schedule a free consultation. I will be happy to meet with and, at no cost or obligation, provide a 2nd opinion about your financial situation. We’re here to help you live the life you want to live. 

Quarterly Market Review 2021 Q4.pdf

2021 Year End Market Review.pdf

About Lifetime Capital Group LLC

Lifetime Capital Group is an independent, fee-only wealth management firm that helps successful individuals, families, and closely-held businesses in the San Francisco Bay Area cut through the “noise” about wealth management. We guide our clients in the Bay ARea through the complex business of managing wealth, both for today and for the future.

Our clients in Burlingame, Hillsborough, Foster City, San Mateo, Belmont, San Carlos, Redwood City, Atherton, Menlo Park, Woodside, Portola Valley, Los Altos, and throughout the San Francisco Bay Area get great comfort from knowing we are there to help them stay on track and to achieve their goals.

By choosing to make Lifetime Capital Group your advisor, you can rest assured that you, your family, and your business are well cared for. Schedule a free consultation and take the first step towards living the life you desire.