Welcome to the New Year. The Morningstar broad market index was up 25.78% for the year. The largest gains came for the small cap value funds which were up 31.79% and again show how diversification over time helps our returns. We have had another good year of outperformance.

The three things we are now paying attention to are inflation, Omicron, and the federal deficit. As strange as it sounds, from an investing perspective, inflation is not too concerning yet. Historically stocks that have risen with inflation are an excellent hedge. However, if inflation goes on too long, and too high, it does become a problem. If this happens, the historical "cure" is to raise interest rates, and the Fed has indicated they plan several (three) rate hikes this year. Personally, I think we will only see two. The debate last year was, is it temporary or long term? The long term, I think, has won that discussion and is an issue we may need to address later this year. Next is Omicron, as I write this, it appears to have spread very quickly, however in most cases, it seems to present milder, non-life-threatening symptoms. If businesses are shut down, as we were last year, we may need to shift where we place our funds. A poor business environment with rising interest rates is difficult to navigate. You may think just go to cash, however, cash in a high inflation market can be worse than riding a market through a dip. Remember the concept of permanent loss of capital in this regard. The last issue of concern is the federal deficit which eventually will be a problem. Individuals, businesses, AND governments cannot spend more than they bring in forever! Eventually, this becomes a problem. It seems that the trillion dollars plus "Build Back Better" spending bill is mired in the DC quagmire and will not pass as proposed. Instead, we may see nothing or a pared-down version. The proposed programs may have some good aspects, but raising taxes on business while giving tax breaks to high-income earners in high tax states at the expense of Coloradoans is not something I want. Also, I'm fairly sure the market would react poorly.

Looking forward I think the market will continue to rise with inflation, the supply chain issues will slowly resolve, unemployment will keep dropping and, if corporate profits are close to what is expected, it could be yet another good year. I do expect more market volatility though, so be patient with the headline news.

Our Annual Privacy Notice is available for download below. Please know that we do not share or sell any of your information unless it is necessary to invest your accounts, or you direct us to. If you would like our ADV (the document, we file to be a Registered Investment Advisor) let us know and we will get you a copy. It is a great read. (I can't believe I just wrote that). Also, some news. Nick will be taking over more of the operations of the firm, and we are having discussions on his becoming an owner of Integra. I will be going to a three-day workweek. My wife laughed herself silly when I told her about that! However, be assured I will be available if anything pressing comes up. Finally, the office will continue its current days and hours of operation regardless of these changes.

Keith, Nick, & I want to express our thanks to Katie. We had a busier than usual year end, a lot of the companies we work with are short-staffed and the Schwab acquisition of TD made things more trying than usual. Through her persistence, Katie was able to get time-sensitive things done. It was impressive!! Nicely done and Thanks. We are grateful for the trust you have in us, and we will continue to be the best stewards of your and our own money as we can. Thanks for your trust in all of us! 

Download our Annual Privacy Notice …Here