By Morf Morford
Tacoma Daily Index
If your finances in 2021 exploded, imploded, were inverted, convoluted and introverted, you are in good company.
Personally and professionally, in businesses, and bank accounts large and small, money and markets seemed to have a mind of their own in 2021.
Investments, or even everyday products exploded in value – some like GameStop, even maintaining it for a while.
Others, like a certain category of Dr. Seuss books increased in value stratospherically and then, just as quickly, returned to a semi-relevant market value.
Our much vaunted supply chain problems reverberated all through our economy in ways many of us never would have imagined.
Inflation, in some categories, emerged as a threat many of us had never seen before.
Was inflation, or any of this price craziness, temporary or has market valuation/devaluation hit a pace and a range to match the convulsions of weather systems around the world? Or out our living room windows?
The stock market is not the economy – but what is?
As I mentioned at the beginning, for better or worse, you are not alone if your finances did a lifetime of roller-coasting in a single year.
Here’s a snapshot of some of the headliners of 2021.
There are some familiar categories here.
And some obvious winners (and losers).
Any of us would have known that real estate would be an out of the park winner in 2021, but who would have imagined that crude oil would go up well over 50%?
Or that gold would drop almost 4%?
A guiding principle of investing used to be “invest in what you know”.
In 2021, the best investment strategy might have been “Invest in the craziest asset you ever heard of” – but NOT Theranos.
Asset Class 2021 Return Asset Type
Bitcoin 59.8% Cryptocurrency
WTI Crude Oil 56.4% Commodity
S&P GSCI 37.1% Commodity
Dow Jones Real Estate Index 35.1% Real Estate
S&P 500 26.9% Equities
S&P/TSX Composite 21.7% Equities
Russell 2000 13.7% Equities
MSCI EAFE 7.8% Equities
U.S. Dollar 6.4% Currency
Bloomberg U.S. Treasury Index -2.5% Bonds
Gold -3.6% Commodity
MSCI Emerging Markets -5.5% Equities
Silver -11.7% Commodity
And, as any recent excursion to a grocery store would reveal, agricultural and livestock food prices rose alongside the Dow Jones Real Estate Index (35.1%).
Show me the money
And if you thought the financial world of solid things, like gold, silver and oil and real estate was in a bit of disarray, take a look at world currencies.
The US dollar, in spite of record-breaking inflation, grew in relative value by almost 6.5%. It was followed by the Chinese Yuan which grew at about 2.7%.
The British pound dropped by a shade over 1% – though thanks to Brexit, most financial observers expect more (even far more) declines in value.
To add to the excitement, the Euro dropped by 7%.
If you could afford it, or if you could maneuver the continually roiling terrain of COVID mandates, requirements and restrictions, I’d say that this is the best time ever to take a trip to Europe.
Or maybe not.
And don’t even think about going on a cruise.
The Japanese yen dropped more than 10% which is terrible – unless you know anyone whose life savings is held in Turkish lira – the Turkish currency dropped by 44%.
Mostly in the last few weeks of 2021.
Closer to home, the Mexican peso dropped by a shade over 3%.
If you are up for the adventure, it might be time to plan that Mexican vacation.
To no one’s surprise, energy across the board went up nearly 50% nationwide – though some, ahem, lucky areas saw increases approaching 100%.
Real estate went up over 42% and basic consumer staples went up over 15%.
With the growth of the work from home movement, the technology sector had to grow – information technology as a whole grew by 33.4% and continued to provide strong returns with Microsoft (51.2%) outperforming many of the other tech giants.
Peloton (-76.4%) was a big loser in 2021.
Who needs cash when we have cryptocurrencies?
Cryptocurrencies had a standout year beyond Bitcoin (59.8%), which itself was out-classed by many other upstart cryptocurrencies and innovative contract platforms like Ethereum (398.3%), Solana (11,177.8%), Avalanche (3,334.8%), and Luna (12,967.3%).
While Tesla had a great year (49.8%) (except for the recall of half a million vehicles) nothing could approach Apple (33.8%) as it became the first U.S. company to reach a $3 trillion market cap at the opening of 2022.
Yes, 2021 was quite a year financially.
In a market when Dr. Suess books, GameStop stock and digital currencies you’ve never heard of were the hottest investment vehicles, you know that we are in for yet another financial wild ride in 2022.
If you can bear even more minutia on the fine print that made 2021 so financially adventurous, take a look here: https://www.visualcapitalist.com/how-every-asset-class-currency-and-sp-500-sector-performed-in-2021/.
And don’t forget the one universal principle of all investing – Past performance is not necessarily indicative of future results.