The Financial Quarterly - Q3 2021

Despite breaking multiple records, a rocky third quarter ended with a thud as concerns about inflation, political brawls, and viral variants weighed.¹

Let's take a look at how markets performed and what we might look forward to in the months to come.

Click here to download our full Q3 2021 Market Review

How Did Markets Perform Last Quarter?

Key Takeaways for Savvy Investors

2021 opened with great optimism and hope that vaccines would put the pandemic in the rearview mirror.

The year so far had a lot of highlights: the U.S. economy roared back from its 2020 recession, personal incomes hit a high mark, home values increased, and U.S. companies enjoyed record profitability.^7,8,9,10

All that optimism has led to record-breaking stock performance (50+ all-time-highs in 2021), causing the S&P 500 to double in less than a year.^11,12 

But, the clouds on the horizon could lead to more choppy seas. Maybe even a storm.

There are a few things I’m watching as we head toward the close of 2021:

• New COVID-19 variants
• Higher inflation
• Fed tapering
• Political and geopolitical concerns
• Economic growth
• The rising debt burden

Since markets are cyclical, the good times are bound to end, and now is a good time to be cautious.

The flipside is that rocky times don’t last forever either.

Bottom line, I'm keeping a close eye on conditions and staying flexible.

It continues to show the importance of having a Bucket Plan in place.

We all know markets go up and down, but the Now and the Soon Buckets allow us to have the confidence to face market volatility head on and reap the rewards of the long-term growth that markets provide investors in our Later Buckets.

Questions about what’s going on? Please reach out. I'd be happy to chat.

Dave Alison, CFP®, EA, BPC

Sources:

1 https://www.cnbc.com/2021/09/29/stock-market-futures-open-to-close-newshtml.html

2 https://www.nasdaq.com/articles/daily-markets%3A-q4-starting-off-rocky-as-interest-rate-fears-grow-2021-10-01

3 U.S. Economic Outlook, Equity Outlook, Consumer Sentiment, Labor Market, Business Outlook, and Fiscal Policy gauges: https://www.cnr.com/insights/speedometers.html (September 2021)

4 https://www2.deloitte.com/us/en/insights/economy/us-economic-forecast/united-states-outlook-analysis.html

5 https://www.blackrock.com/us/individual/insights/taking-stock-quarterly-outlook

6 https://www.conference-board.org/research/us-forecast

7 https://www.marketwatch.com/story/u-s-economy-grew-revised-6-7-in-second-quarter-gdp-shows-11633007236

8 https://www.nbcnews.com/business/business-news/personal-income-just-hit-record-high-here-s-where-spending-n1265948

9 https://www.usnews.com/news/economy/articles/2021-09-28/home-prices-continue-record-setting-pace-rising-197-in-july

10 https://www.reuters.com/business/investors-watch-us-companies-record-profit-margins-costs-rise-further-2021-09-22/

11 https://www.marketwatch.com/story/sp-500-marks-51st-record-of-2021-matching-the-most-in-a-calendar-year-as-stocks-clamber-higher-wednesday-2021-08-25

12 https://www.yahoo.com/now/p-500-jumps-more-double-101210806.html

S&P 500: https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC (Closing price performance between June 30, 2021 and September 30, 2021)

NASDAQ: https://finance.yahoo.com/quote/%5EIXIC?p=%5EIXIC (Closing price performance between June 30, 2021 and September 30, 2021)

Dow Jones Industrial Average: https://finance.yahoo.com/quote/%5EDJI (Closing price performance between June 30, 2021 and September 30, 2021)

The S&P 500 is a stock index considered to be representative of the U.S. stock market in general. The NASDAQ Composite Index is an unmanaged composite index of over 2,500 common equities listed on the NASDAQ stock exchange. The Dow Jones Industrial Average is a price-weighted index that tracks 30 large, publicly traded American companies.

All index returns exclude reinvested dividends and interest. Indices are unmanaged and cannot be invested into directly.