As the calendar rolls over to another new year (already?), it can be healthy to spend time thinking about the past year and the lessons learned. I don’t know about you, but reflecting on the past, trying to make sense of the present, and planning for the future gives me a lot of energy and satisfaction. With that said, I hope you’ll try an exercise with me.
Imagine yourself in our office in January of 2020. We are reviewing the past year (as a reminder, 2019 was the best year for a balanced portfolio in about 25 years), the capital markets were posting new highs, and expectations for the upcoming year were generally upbeat and positive. However, we had some huge concerns to share!
We received new insight (through a dream, a vision, or maybe a crystal ball) and already knew the events that would unfold over the following four years. This new clarity promised that before the year 2024, several major events would take place, including:
- A global pandemic and complete economic shutdown
- Police brutality and a videoed killing of George Floyd, sparking global civil protests
- The sitting president being impeached, acquitted, losing the next election, and claiming fraud
- Russia invading Ukraine
- The US Capitol building being breached in a coordinated attack
- Global supply chain disruptions and scarcity of many goods
- Inflation spiking to levels not seen in fifty years
- Interest rates rising sharp and fast
- Nine banks failing
- Israel being invaded
Is that enough to get your heart racing? After hearing this premonition, I suppose many of you would have anxiously said, “Get me out of the stock market!” If not that, your first question you would likely have been, “What do we do?”
Now having the luxury of hindsight, we can say that in the face of so much adversity, the economy and markets were resilient. It’s been a volatile ride, but your patience has paid off. The S&P 500 index began 2020 at 3,257 and ended 2023 at 4,769. That’s a total increase of more than 45%. Be honest with yourself. Had you known in advance all the news headlines of the past four years, would you have made a different decision than to stick with your long-term investment goals?
S&P 500 January 2020-December 2023
As we enter this (and every) new year, the same uncertainty exists. Unpredictable events will occur, there will be moments of tragedy and triumph, things will happen that have never happened before, and we will worry about things we can’t control. Now, as in the past, our commitment to you is that we will be your partner through the uncertainty, help you plan for what we can control, and advocate for your long-term goals in the face of short-term crises. Resilience pays off, and while we always hope for the best, we can also plan for the worst.
Thank you for letting us be your financial partner. Bring it on 2024, come what may!
Drew Richey
JG2024-0103