top of page

Who Won in '21?


This time last year may have had many investors wondering if a dramatic stock market drop would be imminent, but the numbers are officially in for all to see. With the benefit of hindsight, investors who stayed the course with a long-term focus and diversification reaped gains, as you can see in our Q4 Quarterly Market Review and 2021 Market Review where the results indicate as follows:


  • US and International Developed Stocks Post Positive Returns, both for the last quarter and 2021 (see page 3 of the attached Q4 Quarterly Market Review and also page 3 of the 2021 Market Review) as well as chart below how US Stocks were up 9.28% last quarter while International Developed Country Stocks were up by 3.14% and Emerging Market Stocks were down 1.31%. Returns for 2021 followed the same theme as you can see on page 3 of the attached 2021 Annual Market Review. US Stocks were up 25.66% last year, International Developed Country Stocks were up 12.62% and Emerging Market Stocks were down 2.54%.


  • Bonds Were Down Slightly in 2021 (see page 3 of the 2021 Annual Market Review). US Bonds were down 1.54% in 2021 and International Bonds were down 1.40%.


Diversification Still a Key Ingredient to a Winning Portfolio Mix

Poor bond performance does not necessarily change our view to get out of bonds right now, nor necessarily to move everything there either while they are low. Bonds can be a stabilizing force in a portfolio, and we do expect negative returns in the bonds funds which we purchase for clients over any given year.


However, we expect that the negative returns we experience in bond funds to be much less than the negative returns that may be expected in stock funds. See the diversification chart on page 12 of the 2021 Market Review that highlights how different global stock/bond mixes perform and the benefits of diversification from aggressive and 100% Equity (stocks) to 100% Fixed Income (bonds) to various proportions of stock/bond mixes such as 80/20, 60/40, 40/60, and 20/30.


Looking at the 1 year, 3-, 5-, and 10-year comparisons of each of these mixes, you can see that the returns vary, but not as much as one would think among the different portfolio mixes. As clients meet with us, based on their specific situations, risk tolerance and goals, we recommend a mix that is best suited to their specific long-term financial goals.


Stock Market Up Last Year May Give Some Investors Increased Anxiety

On the final page of the Q4 Quarterly Market Review, Weston Wellington, Vice President of Dimensional Fund Advisors, writes that stock market highs can lead some investors to believe that the stock market will soon dramatically drop. Again, that is exactly the sentiment many of our clients voiced this time last time. While stock market lows may be in the cards for the future, record setting stock market returns do not automatically lead to a downturn. Weston shows that the 1, 3 and 5 years returns for the S&P 500 were similar after both a new market high and a 20 % market decline. The moral of the story is that even though 2021 was generally a strong year in the stock market, an investor should not necessarily assume that a dramatic downturn in the stock market is imminent in 2022.



For Full Analysis, See Reports Below:






Comments


 

 

© 2020 Financial Freedom for Dentists, LLC

All written content on this site is for information purposes only. Opinions expressed herein are solely those of Financial Freedom for Dentists LLC and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual advisor prior to implementation. Advisory services are offered through Financial Freedom for Dentists LLC, a SEC Investment Advisor.  Financial Freedom for Dentists LLC is not affiliated with or endorsed by the Social Security Administration or any government agency, and are not engaged in the practice of law. The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Washington or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Images and photographs are included for the sole purpose of visually enhancing the website. They should not be construed as an endorsement or testimonial from any of the persons in the photograph. The inclusion of any link is not an endorsement of any products or services by Financial Freedom for Dentists LLC. All links have been provided only as a convenience. These include links to web sites operated by other government agencies, nonprofit organizations and private businesses. When you use one of these links, you are no longer on this site and this Privacy Notice will not apply. When you link to another web site, you are subject to the privacy policy of that new site.  When you follow a link to one of these sites neither Financial Freedom for Dentists LLC, nor any agency, officer, or employee of the Financial Freedom for Dentists LLC warrants the accuracy, reliability or timeliness of any information published by these external sites, nor endorses any content, viewpoints, products, or services linked from these systems, and cannot be held liable for any losses caused by reliance on the accuracy, reliability or timeliness of their information. Portions of such information may be incorrect or not current. Any person or entity that relies on any information obtained from these systems does so at her or his own risk.

Advisory services are offered through Financial Freedom for Dentists LLC, a SEC Investment Advisor.  The Adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.

bottom of page