It is fair to say that 2022 markets have already started with what we believe will be a theme for the year – rising volatility. It is easy to forget that market volatility is normal, especially after a year like 2021 when stock market volatility was well below historical averages. 2021 was a year of incredibly strong growth in the markets, with the US economy rebounding from the COVID recession of 2020. As we near the end of January, we look ahead to set expectations for the rest of the year knowing there are many changes on the horizon. We continue to focus on long-term investing, knowing that staying the course in times of volatility and using these periods to tax-loss harvest and rebalance will pay dividends in the long run. 

2022 Outlook:

• Transitioning back towards historically normal levels of volatility
• The Fed’s current hawkish stance on interest rates, with the first anticipated increase as soon as March
• Slowed growth expectations
• A shift from growth to value
• A reduction in fiscal stimulus
• Geopolitical tensions over Ukraine
• Persistent inflation
• Mid-Term elections in the US
• The spread and peak of the omicron variant

Here are a few articles from Charles Schwab investment strategists that discuss the start of 2022 as well as what lies ahead.  

Fed’s Message: Get Ready https://www.schwab.com/resource-center/insights/content/fomc-meeting

What Do Rising Rates Mean for Stock Investors? https://www.schwab.com/resource-center/insights/content/what-do-rising-rates-mean-stock-investors

Smoke on the Water … Fire Down Below https://www.schwab.com/resource-center/insights/content/smoke-on-water-fire-down-below

Your 2021 Tax Return

If DHJJ prepares your tax return, please send your tax documents in as soon as you can to beat the tax season rush. You do not need to wait until your Schwab 1099 forms become available. We will have those on file as soon as they are released in the middle of February.