What I’m Most Proud of in 2021

Dec 31, 2021

In this week’s Money Talks, I’d like to wrap up 2021 with a few reflections on the year that was.

Back in January, we took a high-level look at the economy and markets, and I shared some thoughts on what I expected in the months ahead. (If you missed it, you can review it here.)

Looking back, I have to admit I’m pretty pleased.

I told you I expected the Federal Reserve would continue to stimulate the economy with super-low interest rates and so-called quantitative easing (or “QE”).

That was generally true, with the Fed only recently announcing plans to slow down its QE program in November.

I thought stocks could hit much higher highs in 2021.

Using the S&P 500 as the measuring stick, the market gained nearly 25% this year as I write. That’s more than double the market’s long-term average return. And many individual stocks did even better.

I also thought housing would continue to do well. And boy, did it ever.

As of October, U.S. average home prices were on pace to gain a whopping 17% this year.

That’s well above 2020’s record-breaking 11% gain, and nearly double the prior peak of 10% set during the housing bubble in 2006.

So, what did I get wrong?

Well, you could argue that my biggest “miss” was not being bullish enough.

While I expected stocks to make higher highs, I thought we could see some significant volatility along the way. So, I encouraged you to be sure to have a trailing stop (or other exit strategy) in place for every investment you owned.

Instead, we had mostly smooth sailing. The S&P 500 experienced just three pullbacks of at least 5%. But none of these declines exceeded even 6%, let alone the 10% considered to be an official correction.

One obvious exception includes popular, high-growth stocks.

Many of these stocks suffered significant declines in the spring and again this fall. So, I certainly don’t regret urging you to follow your stops, in any case.

All in all, I’m thrilled to have gotten the “big picture” mostly correct. And I hope this outlook helped you stay on the right side of the markets this year.

If so, stay tuned. I’m planning to share my expectations for 2022 with Money Talks readers next month.

In addition to the various commentary I’ve provided on the state of the markets this year, I’ve also reviewed a number of topics that I hope have been useful. In case you missed any of them, I’ll recap them briefly below, along with links to the original articles.

I shared my thoughts on cryptocurrencies in March of this year. You can catch up on the four-part series here:

Advice I’d Give My Mom on Cryptos
Do This Now with Bitcoin
The Crypto Bubble Lands at the Dinner Table
The Barber Goes All In, Crypto Questions, & a Free E-Book

In the late spring, I did a six-part series demonstrating how we can take a portfolio-building strategy from the great Ray Dalio and make it even better. We got a lot of great reader feedback on that series, so I’m sharing the links to it here, in case you missed it:

If There’s a ‘Holy Grail’ of Investing, This Could Be It
Get Off the Stock Market ‘Rollercoaster’ Forever
How To Beat A Legendary Billionaire at His Own Game
The Wait is Finally Over
How to Make the ‘Holy Grail’ Even Better
The ‘Holy Grail’ Q&A: Answering Your Most Important Questions on The All Seasons Portfolio That leads me to my review of the book “Money: Master the Game” by Tony Robbins. This is one of the most influential books I’ve ever read when it comes to investing. And it is where Dalio explained his All-Weather portfolio approach, the starting point for the strategy mentioned above.

And finally, I wrote many times about one of my favorite subjects: risk management. I covered trailing stops, one of the easiest changes you can make to your investing strategy to protect yourself from big drops. I also wrote about position sizing, which ensures that you invest more money in less risky stocks and smaller amounts in stocks that carry more risk. Finally, I covered asset allocation — spreading your investments across a diversified group of investments.

I hope you’ll go back and review any of these that interest you that you may have missed along the way and even more, I hope you’ll find them to be valuable and enlightening.

Again, I’d love to get your feedback on our first year of Money Talks and how I can make this publication even more useful for you in the new year.

You can reach me directly at [email protected]. As always, I can’t respond to every email, but I personally read them all.

Happy New Year to you and yours!