The final quarter of 2021 capped off a year with equity returns far higher than most investment strategists predicted or expected. While the S&P 500 gained 11% in the quarter, MSCI EAFE (international stocks) was up just 2.7% while MSCI Emerging Markets stocks fell 1.2%. And the Bloomberg Aggregate Bond index was flat.
Both U.S. economic growth and U.S. corporate profit growth powered the market higher in spite of spiking COVID infections, rising inflation, and expectations that the Federal Reserve would begin to curtail its easy monetary policy.
Looking at 2022, we understand the risks facing both the markets and the economy. But we have a constructive outlook for US and International stocks. Though returns may be tempered because of Fed Policy, the “stickiness” of inflation, and lingering uncertainty of COVID restrictions. Despite these factors, equities remain more attractive than bonds.
Please click on the link below for more detail in our quarterly letter.