February 2022 PDS Market Commentary
What a difference a few weeks can make in the equity market! Many investors were feeling invincible after 2021’s strong returns, especially within large cap domestic stocks. Some maybe even fell into the mindset that markets could only go up. Reality quickly sunk in as the S&P 500 fell by -10%, small cap stocks by -14%, and the technology heavy NASDAQ by -15% at one point throughout the month.
But if you happened to turn on CNBC or watch the evening news, it seemed like the world might be coming to an end with this volatility. Wall Street didn’t dominate the headlines last year when the S&P 500 returned over 27%, but the media was quick to jump on the fear mongering train the day markets began to slide. This caused some to make an emotional decision to rush to sell at whatever cost. Yes, we are in an environment where the Federal Reserve will be consistently increasing the Fed Funds rate to tamp down this record inflation, but they have been saying that for months now. It wasn’t new news in January.
A similar thing can be said about this most recent winter storm that passed through central Ohio. The meteorologists were forecasting this ice/snow storm early in the week and everyone seemed to rush to the grocery store to stock up on what looked like several weeks of rations. I stopped on my way home from work on Wednesday night to pick up coffee (which is essential for my wife and me in a house with two kids under 5!) but I couldn’t believe the long lines, overflowing carts and the empty shelves. Many made an emotional decision and overreacted by stocking up for the rest of the month. Fast forward a couple days and the storm has passed and everything seems to be back to normal, except everyone’s full pantries.
The media is designed to play on investors emotions. In the end, fear and greed gets more people to tune in, which sells more advertising. Yes, we are experiencing more volatility and likely will continue to do so, but we urge investors to not fall into the media’s trap and overreact to the latest headline. This is a great reminder of the time tested quote, “today’s headlines and tomorrow’s reality are seldom the same.”
| Asset Index Category |
Category |
Category |
5-Year |
10-Year |
|
3-Months |
1-Year |
Average |
Average |
|
| S&P 500 Index – Large Companies |
-2.0% |
21.6% |
16.3% |
12.8% |
| S&P 400 Index – Mid-Size Companies |
-5.7% |
12.6% |
11.4% |
10.4% |
| Russell 2000 Index – Small Companies |
-11.7% |
-2.2% |
10.6% |
9.2% |
| MSCI ACWI – Global (U.S. & Intl. Stocks) |
-4.1% |
12.2% |
14.1% |
10.3% |
| MSCI EAFE Index – Developed Intl. |
-4.6% |
7.0% |
9.6% |
6.8% |
| MSCI EM Index – Emerging Markets |
-4.1% |
-7.2% |
9.9% |
4.0% |
| Short-Term Corporate Bonds |
-1.0% |
-1.0% |
2.4% |
1.7% |
| Multi-Sector Bonds |
-2.1% |
-3.0% |
3.6% |
2.5% |
| International Government Bonds |
-3.2% |
-10.1% |
1.8% |
-1.1% |
| Bloomberg Commodity Index |
4.4% |
34.7% |
3.7% |
-2.2% |
| Dow Jones U.S. Real Estate |
-1.7% |
28.0% |
12.3% |
9.6% |
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only. Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy. It is provided with the understanding that no fiduciary relationship exists because of this report. Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice. PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice. If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives. All rights reserved.