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Stocks Did Great In 2021, Now What?

Stocks had a historically good year in 2021, while the economy bounced back amid higher prices and supply chain shortages. This week in the LPL Market Signals podcast, Jeff Buchbinder and Ryan Detrick breakdown 2021, discuss some lessons learned, and focus on what to expect in 2022.

2021 In Review

The S&P 500 gained nearly 27% and made an amazing 70 new all-time highs along the way. Ryan notes that the amazing part was the lack of volatility, given the scary headlines, as the S&P 500’s largest pullback all year was only 5.2%. Jeff adds that we might expect to see more volatility in 2022, especially amid potential rate hikes and an aging economy. Lastly, the strategists discuss some signs from a year ago that warned about a potentially big move higher.

What we learned

Jeff explains that we learned that valuations aren’t a good short-term timing indicator. Stocks weren’t cheap last year at this time, yet earnings expectations exploded higher and helped to justify the big move higher. Ryan adds that we learned that mixing your political views and investments don’t work, as many investors have missed out on big gains because they didn’t like the current president. Instead, the focus should be on the fundamentals, as they matter more.

Now what?

Ryan notes that bonds had a poor year in 2021, as they actually fell for only the fourth time since the mid-70s. That could mean they might have a bounce back this year though, but we still expect low single digit returns when all is said and done. Turning to stocks, one key concept to note is that long quarterly win streaks like we are seeing now tend to resolve higher still. Most investors might not realize that, but remember, an object in motion tends to stay in motion. 

Tune in now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunesGoogle Podcasts, or Spotify and find us on the LPL Research YouTube channel.



This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 


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