Broker Check

December Newsletter


“Never Stop Believing in Santa Claus Rallies”

With Thanksgiving just behind us (a time of thankfulness and gratitude), and Christmas just ahead (a time of gift giving and pondering if it is better to give than receive) and the New Year just around the corner (a fresh start), we are officially in the middle of the holiday season and a lot is happening in the world.  All these occasions prompt me to wonder what really brings happiness; with a nod to what brings retirement happiness? 

Before tackling that question let’s review some recent significant events.

Last Friday, the world stock markets, oil prices, and U.S. Treasury yields plunged after South Africa raised the alarm on what could turn out to be a fast-spreading new strain of the Corona virus, known as the Omicron variant. This sparked concerns that travel restrictions are yet again making the news and other restrictions could delay global economic recovery. The new variant will leave the stock markets and the world guessing about its’ path throughout the month of December and beyond.  

Although each waive will ultimately have less impact on the economy as options expand on how to prepare, treat, and live with the Virus. It will take weeks to months to gather reliable data concerning the effects of this new variant.  Other items that will contribute to December being one of the most volatile months of this year are inflation concerns, continued supply chain challenges, another pending government debt ceiling deadline along with the high amount of trading that occurs at the end of the year to accommodate rebalancing and end of year dividends that impact stock pricing.

Federal Reserve Chairman Jerome Powell stated in testimony on Capitol Hill yesterday that it's time to "retire" the word transitory" when it comes to describing inflation. He also suggested the Fed could speed up plans to pull back on, or taper bond purchases that have helped to keep long-term rates low. All this fueled another stock decline on Tuesday and  investors are interpreting Powell's comments as a sign that the Fed may look to raise interest rates more aggressively at some point next year, even as concerns about Covid remain.

If history is any guide, the Fed's "taper-tantrum" of 2013 was followed by strong gains for equities, as traders bet the economy was healthy enough to stand on its own.  Powell’s comments on Tuesday suggested that the Fed will be shifting gears to tighter monetary policy. "The risk of higher inflation has increased," he explained as he acknowledged that inflation is proving more powerful and persistent than expected.

For those still working, keep in mind that NOT all inflation is bad in an environment where wages are increasing, all fixed rate loans, such as mortgages, car loans and student loans essentially are discounted.

Still, investors need to keep in mind that even with the recent bout of volatility, Wall Street is nonetheless having another incredible year in 2021. Steve and I have spent most of the year taking gains off the table while rebalancing and managing risk in client portfolios. Below is a chart showing Year to date as well as one, two, and three-year look back periods for equities, fixed Income, and total returns after management fees. 

Getting back to Happiness.  Having adequate money is great, but health and relationships with family and peers matter just as much to retirees. These three focuses; investments, health and relationships lead to high satisfaction in retirement and are central to retirement happiness.   Having enough money, relationships with your peers and community involvement, and good health.  Not one of these three pillars leads to happiness on its own. However, the accumulation of money during one’s working years, has a direct linear positive correlation to happiness up to about the $4 million dollar mark.  According to Professor Michael Finke at the American College of Financial Services.

Retirement may not be exactly the way you pictured it, because it is much like the rest of life; things change.  Perhaps the key is to focus on those three categories that lead to happiness: successful management of your finances, maintaining strong relationships, and taking care of your health. 

We are here to help you with the management of your portfolio and provide assistance with financial planning items as well as relay ideas we see leading to a successful and happy retirement.

The end of year quarterly reports will be delivered in mid-January and we will be delivering reports in paper and electronically, using the method clients have previously specified.  As we continue to transition into our new performance and reporting software, we will be using a new vault system for those receiving electronic reports.  In order to implement this system we will be sending out two emails next week, please look for these emails as they will only operate for seven days from the date of delivery.  They will help set up vault access for each client.  

Everyone in our office wishes you a happy and safe holiday season!


Intelligent Investment Management, LLP