November 2021 Financial Markets Commentary
Shockingly, the holiday season is upon us already! We are grateful to be able to spend time with family and friends during this exciting time of the year, especially after the past 18 months. The holidays start with Halloween at our house, but how does this relate to markets and the economy today?
The anticipation was building the entire month of October for our kids. They ran around in their costumes almost every day with big smiles on their faces. Their exuberance reminds us of the excitement within the cryptocurrency space. Bitcoin, ethereum, binance, cardano and dogecoin to name a few are all near their all-time highs as traders try to accumulate as much as possible (our kids clearly did the same with their Halloween candy). The entire cryptocurrency market just shot past $3 trillion dollars. This has created an incredible amount of wealth, but many risks lie ahead for this asset class such as regulation, illiquidity, instability, cybersecurity, and possible manipulation.
The grocery stores were stocked with candy and Halloween supplies, but we noticed slightly higher prices at the register this year. According to the National Retail Foundation, Americans spent about $10.4 billion on Halloween, up from 2020’s $8.05 billion. Inflation has been a hot topic with many areas experiencing significant price hikes such as energy, food, housing and vehicles. The Federal Reserve expects this to be temporary partially due to the pandemic, but we believe Americans will continue to experience higher inflation over the next few years.
The sugar high kept our kids running around like crazy for many days following Halloween, but eventually the candy ran out and they had to adjust back to normal. Similarly, the Federal Reserve and Washington have pumped so much stimulus into the economy that is has resulted in a sugar high for the markets. However, as inflation has ticked up, the Federal Reserve will start taking the candy bowl away by reducing their bond purchase program and by raising interest rates. We would expect an increased amount of volatility as markets and the economy adjust to the new normal over the next 12-24 months.
Our kids were fortunate to collect more candy than they could physically eat, even though they would tell us otherwise! But we used this as a great lesson to give back to those less fortunate. We donated half of their candy to Feed the Kids Columbus and remind clients to consider giving back to those in need. We are thankful to work with an incredible group of people and wish you the best during this holiday season!
| Asset Index Category |
Category |
Category |
5-Year |
10-Year |
|
3-Months |
1-Year |
Average |
Average |
|
| S&P 500 Index – Large Companies |
4.8% |
40.8% |
16.7% |
13.9% |
| S&P 400 Index – Mid-Size Companies |
3.6% |
47.0% |
13.1% |
12.1% |
| Russell 2000 Index – Small Companies |
3.2% |
49.3% |
14.0% |
12.0% |
| MSCI ACWI – Global (U.S. & Intl. Stocks) |
3.2% |
38.3% |
14.6% |
11.3% |
| MSCI EAFE Index – Developed Intl. |
1.2% |
34.2% |
9.8% |
7.4% |
| MSCI EM Index – Emerging Markets |
-0.5% |
17.0% |
9.4% |
4.9% |
| Short-Term Corporate Bonds |
-0.5% |
1.3% |
2.3% |
2.0% |
| Multi-Sector Bonds |
-1.1% |
-0.5% |
3.1% |
3.0% |
| International Government Bonds |
-4.2% |
-5.4% |
0.4% |
-0.7% |
| Bloomberg Commodity Index |
7.4% |
43.9% |
5.1% |
-3.1% |
| Dow Jones U.S. Real Estate |
3.2% |
44.2% |
11.2% |
11.0% |
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