Remember when the markets were volatile, and you were hesitant to buy at every chance you got? You don’t? Regardless, I’m glad you remained invested and added to your savings at every opportunity you had. 

Your oldest is now 19 and flourishing in her second year of college. That 529 that you set up has grown because you started it the day she was born. Her account has survived the US Government Shutdown (2013), Ebola virus (2014), Oil crash (2016), unexpected Trump win (2016), US-China Trade War (2018), another US Government Shutdown (2018), Covid-19 (2020), Inflation (2021), Russia Invasion (2022), etc. You know what? Her investing history turned out pretty good. She was unbearable as a teenager but she’s well on her way to great success as an adult.

Your son is 13 and fluent in two languages, English and American Sign Language (ASL). Though he’s had his early life challenges, he’s done well through school and will continue to impress. His account has lived through the same market events, but he won’t need the money for another four years and you’ll have to continue to contribute to his account to ensure he has the same launching pad as his sister. 

As a reminder, 2022 was an interesting time. The world is freshly coming off a global pandemic, as a result, it experienced inflation not seen in decades. There was a war between Russia and Ukraine, where Ukraine fought for its very existence. This compounded supply chain issues with oil and grains, which added to our inflation woes. The Fed chair at the time was Jerome Powell and he spoke about high inflation and the need to aggressively hike rates. He announced a 0.50% rate hike and left the door open for more 0.50% hikes that year. (Amazing recall after 10 years, I know).

The rest of the world’s banks have increased rates in coordination. High inflation was not unique to the US. Norway, Canada, the United Kingdom, Switzerland, and Australia increased rates to slow down overheated demand. The holdouts were Japan (they’ve been trying to raise inflation but have been losing that battle for decades) and China (zero Covid policies hurt their own economy), where both countries actually lowered their rates. Supply chain issues really put a damper on every country as pandemic lockdowns essentially stopped global trade. Rebuilding that took time. 

Ten years have gone by and 2022 will look like a red dot in the chart above, described so eloquently as “normal” market volatility. That will be true because an average year in the market experienced a drop of 14% more than three-quarters of the time since 1980 (50 years ago). 

But in the moment, none of it felt “normal”. Life didn’t feel “average”. If anything, things felt crummy and seemed like they’d only get worse. Throughout its history, the market always found a way to look past uncertainty and bad news. The global economy found ways to grow. The “Roaring 2020s” had its ups and downs but it chugged along like every other decade. 

We’re in 2032 now. President Elon Musk is actually doing an okay job cleaning up Washington. Yes, congress actually amended the constitution allowing foreign-born presidents. It was either that, or he was going to pack up Starlink and take it to Mars with him. The world would’ve been without the internet. 

Kidding aside, I want to thank my younger self for looking past the noise too. Your investments have compounded because you didn’t do anything rash. You kept it simple and stayed on course. You won’t get these ten years back and you maximized that time. 

— Future Hao

Disclosures

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.