Client Newsletter Q4 2021
Dear friends,
2021 was quite a year! It started with meme stocks (a stock that gains popularity among retail investors through social media). Other major headlines of the year: Tom Brady wins another Super Bowl, Texas freezes, more stimulus checks, Chinese crackdowns, ransomware, Delta variant, CEOs in space, Britney is freed, and the market finished near all-time highs.
The economic effects of Omicron have already been felt into the new year with supply chains stretched and workers calling out sick. We no longer take for granted that shelves will be stocked at the local store. Services from restaurants, call centers, healthcare and just about any institution we use in our daily lives, are struggling with smaller staff and larger demand. This seems to be a fast-moving virus and hopefully we should see the effects of this wave abate soon.
Over the last two years, the markets have seen major gains. 2021 finished near record levels, all while dealing with a pandemic, and has done so in a healthy manner. Technology took the early lead in lifting the market. As of this writing, financial and consumer stocks are leading the pack. Did you know Amazon’s stock price is 10% below its highs from the summer while Procter and Gamble is near an all-time high?
As you probably have noticed, prices on everything we buy have spiked. Inflation has been more than “transitory,” and the higher prices are likely here to stay. The most recent numbers from the end of 2021 show that the annual inflation rate in the US accelerated +6.8% year over year. This is the highest it has been since June of 1982. The Fed has taken notice and is going to act this year by raising interest rates for the first time since the start of the pandemic. Wallstreet thinks there will be three rate increases this year, but I’m not sure there will be that many.
As the markets adjust to these new rates and Covid marches on, we can certainly expect some volatility through the first half of the year. Travel and leisure sectors will continue to work through challenges. Spending may drop a bit as people hunker down at home while this wave of Omicron spreads. However, as we have seen in the past, we will soldier through volatility with diversification and quality positions meant for the long-term. Our mantra is, and always will be, to invest in companies with strong products or services, that generate revenues, have good cash flows, and pay dividends.
We may be conducting fewer in-person meetings, but our doors are always open for Zoom calls. If you anticipate changes to your personal financial situation or would like to discuss your portfolio, please feel free to contact me at knatkin@moonstoneasset.com.
Best,
Investment Advisory services offered through Moonstone Asset Management, Inc. a registered investment adviser
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.