December 20, 2021 Market Commentary
Omicron Fears and the Federal Reserve. Possibly no “Santa Claus” rally!
The stock markets are presently reacting negatively to three realities it now faces:
- Last week, the Federal Reserve indicated it will begin tapering its bond-buying program in 2022. This tapering has given the markets and the economy artificial stimulation over the previous 18 months.
- The Federal Reserve also expects to raise interest rates three times in 2022 to attempt to curb inflation.
- It is currently unknown how bad the Omicron Covid variant may affect the economy in the short term.
Trailing returns from September 2, 2021 to mid-day on December 20, 2021, are now flat for most well-known stock indexes like the S&P 500, Dow, and Nasdaq. This means they have given up all the gains made from October to the middle of December.
We have been underweighted in equities/stocks in all our portfolios and overweight in both cash and fixed income for some time now. Our current goal is to protect our significant gains as much as possible from the last 18-24 months. We will start moving back into our standard equity/stock allocations when we see one, or both, of the following occur 1) the sideways to downward trend begins turning OR 2) it makes financial sense to buy at lower values for the long run.
Our Biblically Responsible Portfolio Positions at this time
- Aggressive Portfolios: typically 98% to 99% equity/stock positions are presently at 86% equity/stock positions with the remainder in cash.
This portfolio’s Risk Number is 74*, which means the Acceptable Six-Month Risk is -16.32%.
- Growth Portfolios: typically 80% equity/stock positions are presently at 68% equity/stock positions with the remainder in cash and fixed income.
This portfolio’s Risk Number is 66*, which means the Acceptable Six-Month Risk is -13.93%.
- Moderate Portfolios: typically 50% to 60% equity/stock positions are presently at 37% equity/stock positions with the remainder in cash and fixed income.
This portfolio’s Risk Number is 52*, which means the Acceptable Six-Month Risk is -10.06%.
- Conservative Portfolios: typically 20% to 25% equity/stock positions are presently at 19% equity/stock positions with the remainder in cash and fixed income.
This portfolio’s Risk Number is 44*, which means the Acceptable Six-Month Risk is -8.07%.
- Ultra Conservative Portfolios: never have equity/stock positions but are always in cash and fixed income.
This portfolio’s Risk Number is 37*, which means the Acceptable Six-Month Risk is -6.08%.
*All Risk Number volatility percentages are based on 95% Historical Probability for six months and are used by our firm to remain as objective as possible in our professional investment management decisions. These numbers are from Riskalyze, a professional, paid advisor tool we use as a firm.
In closing, rest assured we are consistently monitoring events, the markets, and all our portfolios hourly, daily, and many times into the late evenings as well as very early in the mornings for your benefit as our clients.
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As a Fiduciary-based firm, we act as your trusted financial advocate for you. We are here to serve you, not the other way around.
If you would like to discuss, please reply to this commentary by email or text/call us at 830-609-6986.
Have a Merry Christmas,
CEO, Christian Financial Advisors®
Special Hours of Operation
Our physical office will be closed from noon on Tuesday, December 21st until after Christmas; however, we will be working remotely and accepting phone calls, text messages, and emails for service requests until December 24th at noon.
After Christmas, our physical office will be closed starting Wednesday, December 29th until after New Year’s Day; however, we will be working remotely and accepting phone calls, text messages, and emails for service requests until December 31st at noon.
Regular hours resume on Monday, January 3rd, 2022 for both in-office and remote service requests.