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The Latest from Our Blog

When Is A Barometer Not A Barometer?

It’s widely recognized that people do not make perfect financial decisions. In fact, many investors rely on mental shortcuts when asked to make complex decisions. That may be why there are theories that correlate stock market performance to football, hemlines, and sales of headache remedies. For example, last week several articles about the U.S. stock market used the adage, “As goes January, so goes the year.” The saying describes the January Barometer, which holds that the performance of the Standard & Poor’s 500 Index in January has predictive value. If stocks gain in January, then the Index may gain over the full year. If stocks decline in January, then the Index may suffer losses over the full year. According to Jeffrey Hirsch and Christopher Mistal of the Stock Trader’s Almanac, the January Barometer has been 84.5 percent accurate since 1950. Of course, the January Barometer was invented in 1972, and when you evaluate its performance since then:

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Is The Economy Doing Well, Or Not?

f you skimmed the headlines last week, you may have seen that retail sales – the purchases we make from stores in-person or online – declined 1.9 percent in December. The statistic may have raised questions about the strength of the economy. After all, how could retail sales move lower during the holiday season? Media headlines speculated that the spread of the Omicron variant, rising inflation, and consumer grumpiness were to blame. Economists had other ideas, according to Logan Moore and Megan Cassella of Barron’s. “Consumers had long been expected to pull forward their holiday shopping to get ahead of any supply chain backlogs, economists say.” As you think back on when you did your holiday shopping, there is another important question to ask: What time frame does the 1.9 percent capture?

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Here’s a Little Story About a Group Called The Fed…

In the 1950s, then-Fed Chair William McChesney Martin described the Federal Reserve as “the chaperone who has ordered the punch bowl removed just when the party was really warming up.” In 2020, the opposite was true. The Fed, along with fiscal policymakers, filled the stimulus punch bowl to the brim to keep the country from falling into a recession or depression. In November 2021, Fed Vice Chair Richard Clarida explained: “The COVID-19 pandemic and the mitigation efforts put in place to contain it delivered the most severe blow to the U.S. and global economies since the Great Depression. Gross domestic product (GDP) collapsed at a nearly 33 percent annual rate in the second quarter of 2020. More than 22 million jobs were lost in just the first two months of the crisis, and the unemployment rate rose from a 50-year low of 3.5 percent in February to a postwar peak of almost 15 percent in April 2020…The fiscal and monetary policy response in the United States to the COVID crisis was unprecedented in its scale, scope, and speed.”

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2021 Was a Fizzing Mints-In-Soda Kind of Year

Everything seemed to shoot higher – from COVID-19 cases and vaccinations to economic growth and global stock markets. Everything except for optimism. As the year came to an end, a CBS News poll found that 40 percent of Americans felt 2021 was mostly filled with sadness, although almost three out of four people polled said they were hopeful for 2022. As we head into the new year, let’s take a look back at 2021. Vaccinations took off. At the start of the year, very few people were vaccinated against COVID-19. Despite issues with vaccine reluctance and availability, by the end of the year, more than 58 percent of the world’s population had received at least one dose of a COVID-19 vaccine. The United Arab Emirates led the way with 99 percent of the nation’s population vaccinated. Nigeria lagged with about 95 percent of the population unvaccinated. More than 61 percent of Americans were fully vaccinated, and another 12 percent were partially vaccinated, according to Our World in Data. United States’ economic growth was stronger than it has been in decades. In December, The Conference Board estimated the U.S. economy grew by 6.5 percent annualized in the fourth quarter of 2021, and 5.6 percent over the full year. That’s the strongest growth in decades, according to Ben Levisohn of Barron’s. The publication reported the lesson of the last century is, “Don’t underestimate the resilience of the U.S. economy.”

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Do You Know Someone Who Needs Our Help?

Inherently inconstant, life changes frequently. But the amount of change we’ve experienced over the last two years has been overwhelming. It’s a bit hard to remember what “normal” life used to look like. As headlines continue to change every day, to say this is a stressful and confusing time is an understatement!

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Investors Were Feeling Bullish

Last week, the Standard & Poor’s 500 (S&P 500) Index closed at a record high for the 68th time this year. That’s the second-highest number of record closes in a single year. The highest number occurred during 1995 when the S&P 500 had 77 record highs, reported Reuters. That was the year the Dow Jones Industrial Average passed 4,000 for the first time and then rose above 5,000, reported Wayne Duggan of Benzinga. “The market deserves to celebrate. [COVID] brought death and dislocation, but we tend to pay too little heed to what didn’t happen. If vaccines hadn’t changed the pandemic’s trajectory, the U.S. would have suffered nearly 1.1 million additional deaths and 10 million more hospitalizations – according to an epidemiological model by the Commonwealth Fund cited this past week in the Journal of the American Medical Association,” reported Bill Alpert of Barron’s.

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