We Don't Predict -- We Prepare!

January 05, 2022

2021 will certainly go down as a year to remember!

New variants spread across the globe, continued spikes in COVID infections, causing confusion, fear, and ongoing concern as to when and how we will get through this pandemic.  Increases in prices due to inflation and supply chain issues we have not experienced in years, if not decades.  The ‘Great Resignation’ and labor shortages. And a litany of other headlines and controversies. All the while the economy continued to expand and stock prices continued to rise—with the S&P 500 index (S&P) posting annual gains well over 20%!

We all have been touched by COVID. Whether you contracted it yourself and had to fight it off, stayed home for months to keep you and your family safe, or have lost someone close to you; this pandemic has impacted us all in different ways. It amazes me just how resilient the human spirit is! When asked how he is doing, my 93-year-old father often replies, “This getting old thing is not for wimps!” Well, living on this planet the last couple years has not been for wimps either! The pressures we deal with on an ongoing basis can be quite taxing. The strain of a global pandemic, fear for our health and the health of our families, the unknowns that it has brought with it from employment and economic concerns, social and political turmoil, or just being able to access products and services we need and/or want to live our lives. The last two years have been some of the toughest to navigate and keep a positive outlook. I think it is important during these difficult times to acknowledge just how challenging it has been and to celebrate the little successes along the way. We will get through this and we will be stronger as we emerge from these challenges.

When speaking of resilience, the resilience of the US economy and global stock markets has been impressive. In 2020 we felt the shock of the pandemic with a 35% correction followed by a very quick recovery and a year-end performance number for US large stocks of 16%, as measured by the S&P. This surprised many, and as we moved through 2021 with all the challenges that we alluded to above, most stocks around the globe continued to propel higher. US stocks posted gains of 26.5% for large stocks, 14.8% for small stocks, developed international stocks were up 11.8% and emerging markets declined -2.2%. Proving once again that trying to predict the movement of the financial markets can be a very difficult thing to do! A diversified approach to investing, with global exposure and measured risk, was rewarded handsomely over the last two years. Having a plan and sticking to that plan while the world around us may seem to be crumbling can be difficult. It is years like the last two that remind us how important it is to understand why we are taking risks, the importance of knowing what those risks are, and how they will assist us in achieving our goals and dreams when times get challenging.  There’s a phrase we use at ASI, “We don’t predict, we prepare.” The importance of proper preparation has never been more evident than during the last two years.

We commend you for staying the course, for your resilience, determination, and ability to adapt to our new normal! We will miss those that we have lost during this pandemic and will carry the memories that we have shared with them forever. Years from now it is my hope that we will look back at the last few years and realize how amazing we are as a society. Our ability to adapt, to thrive in the face of adversity, to be there for each other, and to strengthen relationships during what will surely be one of the most unique periods in history is truly remarkable.