January 2022

January 01, 2022

Welcome to 2022! A quick admin note; this year will see some changes to this website with a few different pictures and, most notably, a different posting feature. These changes will likely be completed by the end of Q1, so don't be alarmed if the site looks different all of a sudden. With that out of the way, we had a very strong year. With a 16.8% return, we beat all of the Lifecycle Funds and only trailed the C Fund. Hindsight is always 20/20, and my move to the F Fund in February and March sealed in my lower returns for the year. As most of you know, I rarely move to the F Fund, but when I do, I completely move all of my funds to it. I consider it a safe harbor, but I also know there is an opportunity cost to it. For those of you with a higher risk tolerance, maybe you didn't move to the F Fund, and you were rewarded for the risk you took. How do the lessons learned from 2021 apply to 2022? First, any moves to the F Fund will be reconsidered even more carefully. With its negative return profile, it is no longer a true safe harbor. Second, I will adhere to my mathematical models more closely. I overrode my model in February and March based on external non-quantifiable inputs (I have done this before as well, most notably in August and September 2020), but this should be a very rare occurrence. My outlook for 2022 hinges upon the true level of inflation and the Federal Reserve's response to it. It is also tied to the strong performance of 2021. If 2021 were a weak year, then I would be more likely to forecast a low single digit return for the C, S, and I Funds, but our economy seems to be very strong, in spite of all the headwinds. I continue to be bullish and confident in the returns of the C Fund. Keep Investing!