Many Happy Returns

This past year had its share of financial uncertainty, from inflation and rising interest rates to volatile stock and bond markets. Headlines added to the unease, from the growth of artifcial intelligence (AI) to the collapse of Silicon Valley Bank and other lenders to the threat of government shutdowns. So it’s no surprise some people feel anxious right now. When it comes to investing during trying times, it can be easy to lose track of how well markets function. Spoiler alert: They’ve been working just the way we’d expect.

The reason why? Human ingenuity. Throughout history, there have been people and businesses working hard to make the world better. Solving problems can generate profts, and profts lead to market returns. That’s why I say the market runs on human ingenuity.

Despite all the stressful headlines, including geopolitical crises from Ukraine to the Middle East, the MSCI All Country World IMI Index returned 15.5% through the first 11 months of the year. In fact, since the global pandemic started in 2020, that index has averaged about 6.8% per year, which is in line with its historical returns. 

So when taking the time to refect on lessons from this year, make sure to refect on markets and how they worked. Markets do a good job of processing information and incorporating it into the prices of stocks and bonds. Trying to time markets or find mispricings is a waste of time—unless, of course, you know something that other people don’t, before anyone else can make a move. I don’t. Do you? 

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Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.