December 2021
401(k) Allocation

There are trades.

We did warn, last month, that volatility should be expected going forward.  It probably comes as no surprise that models are currently recommending risk off (go to cash) given the current headline stressors.  COVID isn’t going away and the new variant, omicron, is spooking markets that further shut downs may upset the recovery in progress.  Comments by the CEO of Moderna added to the angst as he reported the opinion of his scientists was that “this isn’t good”.  We will have to let time give us those answers.  Current anecdotal evidence is that it is more contagious, but may be less lethal.  That last part is kind of important!  Pile onto this, the comments made by Federal Reserve Chairman Jerome Powell this week that indicate a willingness to taper back their bond purchases more aggressively and to remove the language from their notes that they are going to continue to be “accommodative”.  This threatens the punch bowl that has fueled markets these past 18 months.  Now toss on somewhat disappointing sales results for both Black Friday and Cyber Monday and a market already priced to perfection couldn’t rise above these issues. 

We are exiting any remaining small cap and some mid cap exposure depending on your risk level, and taking this to your Stable Value (cash equivalent) fund for now. 

Should the variant in fact have a much lower fatality rate, supply chain issues start to sort themselves out, and headlines calm down, the stock market will likely be back to the races as there is still quite a lot of cash sitting on the sidelines.  With current inflation over 6% - that cash is now losing quite a bit of purchasing power so cash will likely get put back to work quickly if we see some of these things resolve.

If you have questions, please contact us.

MARKET UPDATE
FINANCIAL PLANNING
COLLEGE AND TAX PLANNING
GRAPHIC OF THE MONTH

To download the December 2021 Newsletter: CLICK HERE

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