If you listen to business news channels at all, you will notice commentators are always looking for a reason why the market is up or down.  The truth is, there are so many things that affect the market, we can’t possibly narrow it down to one specific thing at one specific time.  This chart shows how many headlines we saw throughout 2021 and yet the market persisted in its random walk of returns.  History has taught us two things: markets go up over long periods of time and markets do not go up in a straight line.  There will always be volatility.  There are a few things we can do as prudent investors:

  • Make sure our asset allocation is in line with our long term goals and our risk tolerance
  • Understand what our cash needs are for the foreseeable future and have that cash in hand so we are not forced to sell in down markets
  • Use any extra cash to invest when markets are down

With this methodology, we can weather the storm and take market downturns as the opportunity they are to continue to invest for the long term.

As Much of 2021 That Fits on One Page

S&P 500® Index Total Return and Headlines in 2021

Data from 1/1/2021 – 12/31/2021. Source: ICI, FactSet, Avantis Investors.  Past performance is no guarantee of future results.


Consumer Price Index (CPI): A commonly used statistic to measure inflation from the consumer’s perspective. The Bureau of Labor Statistics calculates the index from detailed consumer spending information. Changes in CPI measure price changes in a market basket of consumer goods and services such as gas, food, clothing, and cars.

Centers for Disease Control and Prevention (CDC): The U.S. federal agency charged with protecting the nation from health, safety and security threats. It bases public health decisions on the highest quality scientific data.

Federal Reserve (Fed): The U.S. central bank responsible for monetary policies affecting the U.S. financial system and the economy.

Federal funds rate (Fed funds rate): An overnight interest rate banks charge each other for loans.

Gross domestic product (GDP): A measure of the total economic output in goods and services for an economy.

S&P 500® Index: A market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The index is widely regarded as the best gauge of large-cap U.S. equities.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

The opinions expressed are those of the portfolio team and are no guarantee of the future performance of any fund. This information is for an educational purpose only and is not intended to serve as investment advice. References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.