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Welcome to 2022!

Investment Advisor · Jan 10, 2022 ·

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Welcome to 2022!

May it bring us peace, prosperity, and a whole lotta love.

And some greater certainty about what lies ahead.

This email includes precious little certainty, but it does have kittens. (All the way down in the P.S.)

You’re probably seeing an endless parade of emails, listicles, and thought pieces loaded with predictions for 2022.

Welcome to 2022! May it bring us peace, prosperity, and a whole lotta love.

Will these predictions be right?

In some ways.

Will they be wrong?

Almost certainly.

Predictions are usually judged by how right or wrong they turn out to be.

Is that the right approach?

Is there innate value in the exercise of looking at the current state of things and thinking about where the winds will take us, to mix metaphors?

Beyond the success or failure of our prognostications?

I think so.

I also think revisiting predictions to see where and why we got it wrong is a great exercise in how complex our world really is.

Rather than issue predictions about 2022 that are certain to be wrong, here are some musings about trends I think will play a role this year.

There’s hope for COVID-19 in 2022.

As Omicron numbers skyrocket, it’s clear the pandemic is still with us in this third year.

But, I’m hopeful that increasing vaccination rates, medical advances like Pfizer’s at-home anti-viral pill, and decreasing virulence could help reduce the impact of COVID on our lives.¹

I also want to acknowledge that our outlook as Americans is not reflected in every country around the world. Getting to the other side of this pandemic will require the whole world’s efforts.

I deeply hope this is our year.

The economy looks poised for more growth.

Despite plenty of hurdles, the U.S. economy looks to have entered 2022 in shape for more growth.

Current estimates suggest the economy will continue to grow this year, faster than typical historical trends.²

But all that depends on a lot of assumptions about variants, spending, hiring, inflation, and more. We’ll see just how rosy those assumptions are as the year progresses.

Politics will dominate headlines.

Mid-term elections mean politics will play a big role (in the media at least).

Election years always mean uncertainty, and that often rattles markets. However, historical analysis shows that markets typically bounce back after election uncertainty is over.³

While the past doesn’t predict the future, it’s a good reminder of why we don’t let elections drive strategy. They’re just one more factor in a very complex system.

Folks are ready for some kind of normal.

I think it’s safe to say that we’re all tired of the pandemic and longing for normalcy.

What does normal look like in 2022?

Will it look like what we had before the pandemic? Will it be completely different?

What do you think?

Do you have any predictions for 2022 to share?

Be well,

Goran Ognjenovic
Independent Investment Advisors
(971) 350-8068
www.independentadvisorsnw.com

P.S. These are the kittens you’re looking for. Here’s a live kitten cam from a rescue.

P.P.S. Need some inspiration for the new year? Here’s a curated list of Ted talks to get you going. I think the talks on happiness and stress are particularly fascinating.

1- https://www.reuters.com/business/healthcare-pharmaceuticals/pfizer-oral-covid-19-pill-gets-us-authorization-at-home-use-2021-12-22/

2- https://www.newyorker.com/news/our-columnists/the-2022-economy-looks-strong-but-beware-the-known-unknowns

3- https://us.etrade.com/knowledge/library/perspectives/daily-insights/midterm-elections-stocks

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

The following posts and commentary are to be used solely as educational tools and do not contain investment advice. Investment advice must be tailored to a particular investor’s specific needs. None of the information contained should be construed to be investment advice. Individuals wishing to tailor a plan to their own needs should seek the help of a Registered Investment Advisor.

There is a high degree of risk in investing and trading. Independent Investment Advisors assumes no responsibility. Principles of Independent Investment Advisors may, at times, maintain directly or indirectly, positions in securities or derivatives mentioned in these comments.

Wrestling with the unknown (+ uplifting news)

Investment Advisor · Dec 3, 2021 ·

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Let’s talk about omicron.

(If you’d rather not, scroll right down to the P.S. for something beautiful.)

Omicron, unsurprisingly markets reacted badly

Since the first known cases of COVID-19 were detected in China, we’ve seen a number of notable mutations as the virus moved across the world. Some, like beta and gamma, didn’t end up being a huge deal.¹

Others, like delta, spread rapidly and caused new waves of infection.

Now we have another variant on our hands: omicron. And it could be a serious one.

Unsurprisingly, markets reacted badly to the news last Friday and gave us our worst market day for the year.²

Why? The short trading day and lack of overall volume over the holiday break gave the selling pressure greater impact on the market than it might have had under normal conditions.

We’ve seen that pattern before and it’s worth keeping in your back pocket: bad news over a holiday often leads to outsized market reactions.

Is omicron dangerous?

Well, we don’t know yet. And we won’t know for several weeks until scientists can determine how the variant will respond to current vaccines and treatments.

If it’s more virulent, it could have delta-level impacts on travel, hospitality, and other parts of the economy.

It could also turn out to be a tiny bump in the road.

We just don’t know yet.

The market is laser-focused on omicron news so we can expect rocky times until the uncertainty clears (or something else takes over the chatter).

So, what can we do?

Rather than try to predict the unknowable or speculate wildly without enough information, let’s do something else instead.

Let’s take a deep breath, step back, and focus on some ground truths:

Everyone is tired of this pandemic and ready to move on. But the pandemic’s not done yet.

We will continue to see COVID-19 variants. Most will fade into the background. Some will be more serious.

New vaccines and treatments are continually being developed and released.

We have been adapting to the virus for nearly two years and we’ll continue to get better at it.

Life is a gift and every day is extraordinary in some way. Let’s cherish that.

Hopefully, we’ll look back in a few months and forget omicron ever hit the headlines.

Until then, we wait, we watch, and we count our blessings.

I’ll be in touch when there’s more to share.

Be well,

Goran Ognjenovic
Independent Investment Advisors
(971) 350-8068
www.independentadvisorsnw.com

P.S. Can I share something uplifting with you? A retired dad (who already fostered 30 kids) adopted five young siblings so they could grow up together.³ How beautiful is that?

P.P.S. Want to learn more about happiness and how to get off the hedonic treadmill? Check out one of the very first TED talks on the science of happiness. Thoughts? Hit “reply” and let me know.

1 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8342008/

2 https://www.cnbc.com/2021/11/26/stock-futures-open-to-close-market-news.html

3 https://www.cbsnews.com/news/foster-dad-lamont-thomas-adopts-five-siblings

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Inflation is High and Persistent

Financial Planner · Nov 19, 2021 ·

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I hope you’re warm, well, and looking forward to some time with family and friends.

I wanted to drop you a quick email about a couple of things: infrastructure, inflation, and taxes.

And I’ve got a blue-sky question for you at the end. I’m really interested in hearing your thoughts.

President Biden just signed his much-debated bipartisan infrastructure deal.

What does that mean for the economy?

In the short term, some of the infrastructure funding will go immediately toward clearing port and transportation bottlenecks, so that might help improve supply chain issues.¹ Fingers crossed.

Though it could be years before you or I drive across a new bridge or highway funded by the bill, some of the maintenance funds could get used in spring construction blitzes.²

Since the job market is already tight, the economy isn’t likely to see an immediate surge in hiring due to infrastructure spending; however, multiple reports suggest ~800,000 new jobs could be added by 2030, though many of them will be temporary rather than long-term jobs.

Economists don’t think inflation is likely to increase due to the slow pace of spending, though the deal is projected to add $256 billion to the federal budget deficit over the next 10 years.

Bottom line, analysts project long-term benefits to the economy in lower business costs, increased labor force participation, and improved competitiveness.³

Inflation might not be as temporary as the Federal Reserve would like it to be.

Prices are up all over, and folks are understandably upset at paying more at the grocery store, gas station, and most everywhere else.

Many analysts hoped that data blips, supply chain clogs, and other pandemic-related disruptions were creating a temporary spike in inflation that would resolve soon.⁴

However, inflation has remained stubbornly high.

In the U.S., prices have increased 6.2% over the last 12 months — the biggest spike since November 1990. And you can see in the chart that some categories measured by the Consumer Price Index (CPI) have soared by much more.⁵

Since the Fed’s goal is to keep long-term inflation around 2% (and that’s what we’ve experienced this century), folks are concerned that “temporary” inflation is lingering longer than we want.

So, are prices going to continue to rise in 2022?

That’s likely, but how much, how fast, and for how long depend on a lot of global factors, including whether the Fed raises interest rates or takes other actions.

I’m keeping an eye on it.

Will your taxes go up in 2022?

That’s the question of the month on Capitol Hill as lawmakers debate the Build Back Better deal that could come with tax law changes.

We don’t know when (or if) the bill will be passed, but I’m watching closely and I’ll update you when we know what’s likely to happen.

Before I go, I’d like to wish you and yours a relaxing Thanksgiving with great food, great fun, and great memories.

Gratefully yours,

Goran Ognjenovic
Independent Investment Advisors
(971) 350-8068
www.independentadvisorsnw.com

P.S. It’s the time of year when the analysts start making predictions for 2022. What are your predictions for next year? What will be the big themes? Hit “reply” and let me know your thoughts!

¹https://www.washingtonpost.com/us-policy/2021/11/09/biden-supply-chain-ports/

² https://www.cnn.com/2021/11/09/politics/biden-infrastructure-bill-spending-economy/index.html

³https://www.moodysanalytics.com/-/media/article/2021/macroeconomic-consequences-of-the-infrastructure-investment-and-jobs-act-and-build-back-better-framework.pdf

⁴https://www.cnn.com/2021/11/13/economy/what-is-inflation-explainer/index.html

⁵https://www.bls.gov/news.release/cpi.nr0.htm

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional.

Gratitude practice?

Financial Planner · Nov 15, 2021 ·

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The last few weeks and months have had a lot of stress and uncertainty.

So, instead of writing to you about politics, or the economy, or the supply chain, I figured I’d change the script and write about something completely different.

Let’s talk about gratitude.

Is gratitude a practice for you?

In my role as a financial professional, I’ll tell you that it should be.

Why?

Let's talk about gratitude! — Gratitude reminds you of what really matters.

Gratitude reminds you of what really matters.

Not the lines at the store.

Not the traffic.

Not what happens on Capitol Hill or Wall Street.

But, what really, truly matters.

I am deeply, abundantly grateful today.

For the food in my fridge.

For the roof over my head.

For my health.

For my circle of family and friends who love me.

For my community that has given me a home.

For my amazing clients and partners who have given me a vocation.

I’m grateful for you.

Taking inventory of all my blessings gets me through the minor irritations.

It also helps me reset when something major happens.

Gratitude calms me when things get stressful and overwhelming.

What are you grateful for?

Has it changed over these crazy couple of years?

Do you have any rituals around gratitude?

Please write back and let me know. I’m excited to hear from you.

With gratitude,

Goran Ognjenovic
Independent Investment Advisors
(971) 350-8068
www.independentadvisorsnw.com

P.S. Can I ask you to do something with me? Would you send an email or text to three people you are grateful for? I bet you’ll make their day. I wrote to you, so now I’ve just got two more :). Hit “reply” and share any responses you get.

P.P.S. Want some insight into the relationship between gratitude and happiness? Here’s a great TED talk on the topic by Benedictine monk David Steindl-Rast. If you watch it, will you send me your thoughts?

The “Great Resignation”

Investment Advisor · Oct 29, 2021 ·

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How are you feeling about work these days?

Are you taking stock of your life and thinking about moving on? (You’re not alone.)

Are you a boss struggling to fill roles and retain your people? (You’re in good company.)

America is going through a pretty major reconfiguration of the labor market.

Headlines are calling it the “Great Resignation” but I think it’s deeper than that.

The pandemic threw many assumptions out of the window. It caused us to think long and hard about a lot of things.

Where we work. How we work. What work means. What we want out of life.

That existential crisis is visible on the supply side of the labor market:

Folks retiring ahead of schedule (not all by choice).¹

Folks quitting their jobs.²

Folks (primarily women) caring for kids and family instead of going back to work.³

Folks striking over pay and working conditions.⁴

Folks starting new businesses.⁵

And it’s visible on the demand side as well:

Restaurants struggling to staff up.⁶

Shipping ports clogging up because there aren’t enough truckers to haul goods away.⁷

Employers offering higher wages and perks to attract job seekers.⁸

At its most basic level, employment is a transaction: a certain amount of work for a certain amount of pay.

But it’s really much more than that.

For many of us, who we are as a worker…

A business owner…

A boss…

Is central to our identity.

And the ground is shifting under our feet. That makes folks anxious.

High-anxiety times like these bring plenty of judgment, blame, and dramatic headlines.

Are workers who don’t want to take low-paying, high burnout jobs lazy?

Of course not.

Are business owners worried about keeping their doors open evil capitalists?

Nope.

Are employees organizing strikes or leaving for better opportunities disloyal?

No way.

We’re all doing the best we can every day.

When we see talking heads griping about “entitled” workers or “greedy” businesses, let’s remember that behind the numbers are real people with real struggles.

A parent with a medically fragile kid who is afraid to go back to work.

A business owner who worries the staffing shortage will put her out of business.

A laid-off worker who doesn’t have the skills needed to get a different job.

A manager who is doing two jobs because he can’t fill a key role.

Let’s be compassionate toward one another.

What does the labor market upheaval mean for the economy?

That’s hard to say.

It could cause a slowdown in some sectors if businesses struggle to fulfill demand.

It could lead to increased inflation if higher wages get passed on as higher prices.

It could be a factor in a market correction.

It could also accelerate trends toward automation, remote work, and offshoring.

Bottom line: Like most major events in history, the overall consequences won’t be fully visible for a long time.