These are some of our favorite charts and graphs that told the biggest stories from 2022.

Stock Market Performance

Each year, the stock market has its narrative around why it performed the way it did. With 2022 coming to a close and, as of 12/21, the stock market down 17.31%, one of the narratives for this year has been persistent volatility. As the chart above shows, 2022 marks the most days (30) that the market was either up or down 1%at the end of the week. 16 of the instances were down days, and 14 of the instances were positive.

In terms of additional narratives for this year, our team has been referencing a year like 2022 as a “price of admission” year. In other words, to receive the benefit of long-term equity returns, negative years (like 2022) are part of the price of admission to achieve the benefits. We reference this chart when looking at the negative headlines the market has overcome over the years.

INFLATION AND SAVINGS

With interest rates increasing rapidly, there have been many moving parts in all areas of the economy. From real estate to food prices, most industries have been impacted. One area that consumers/investors should look to take advantage of is their saving and checking accounts. During the most recent period of low-interest rates, we have become accustomed to these accounts paying little to nothing in interest. However, as the chart above mentions, Americans are leaving dollars on the table by not searching out higher interest bank accounts. Our team recommends utilizing a local credit union which often has new member checking benefits, or aggregator sites like NerdWallet do a good job of providing high-paying savings accounts.

Market Volatility

With all the market downturns and volatility, we thought it would be interesting to see how long it takes to make your money back, depending on how you are invested. Ensuring your allocations are positioned so you can ride out any downturns is essential for any investor. 

Job Market

It's been a unique time in the jobs market. Job openings have exceeded people searching for jobs by nearly 5 million for 2022. The persistence of this even with all the uncertainty around the economy and inflation is surprising. As a result of the pandemic, more people are seeking remote work. LinkedIn revealed that remote jobs, which take up 15.9% of job listings, attract 52.9% of job applicants.

FTX

2022 charts of the year wouldn’t be complete without referencing the rise and fall of the cryptocurrency exchange FTX. Even as I write this, new information surrounding this saga continues to emerge, and it will be a high-profile news story to follow into 2023.

The above chart shows how the organization’s value got as high as $32B as recently as January 2022 during FTX’s most recent round of funding. There are many lessons to be learned from fraud scenarios, and like you, we will follow this story into the new year.

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April, May, and June 2022 have been long, emotional months. The purpose of our charts of the quarter posts is to provide financial updates, and it may be no surprise that this post is focused on interest rates, housing prices, and market volatility.

1: Interest rates increased by HALF A PERCENT in May 2022

On May 4, 2022, the Federal Reserve raised interest rates by ½ a percent. While ½ of a percent may feel insignificant, this was the most significant interest hike in more than two decades.

What does an increased interest rate mean for you? It means that borrowing money from the bank is more expensive. It has also historically been good news for your saving and investment accounts.

Specifically, this chart summarizes investment returns since 1990 after the Federal Reserve raised interest rates by at least ½ a percent. As you can see, on average, stocks returned +20.5%, and bonds returned +13.8% one year after the interest rate hike. Only time will tell what happens, but it wouldn’t surprise us if returns got better in the coming months.

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Source: Morningstar

2: How long does it take to get your money back?

During Q2 2022 – from April 1 – June 30, the S&P 500 returned -16%. Checking your account balance hasn’t been a pleasant experience in Q2 ’22.

Most people want to know the answer to the question, “how long is it going to take to get my money back?” Since this was a recurring question this quarter, Andrew Gladhill wrote a blog post called Payback Periods: How Long to Make Your Money Back. We encourage you to read the full article, but we selected one chart to share from this post.

This chart states that 95% of the time, it takes nine months for investors to, once again, reach another all-time high in their account. Said differently, most of the time, the market rewards investors who stay invested for at least nine months. What does this mean for you?

Remaining invested and, in the case of 401(k) accounts, continuing to invest your dollars is the easiest way to see your account balance recover. This can be an uncomfortable experience, and we recommend reaching out to our team if you feel uneasy or want to brainstorm ways to adjust your account strategies.

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Source: CFA Institute

3: Are we heading into a recession?

Source: Google

Are we heading into a recession? Are you feeling worried, fearful, and frustrated? As this chart illustrates, the Google Trend for the search engine “recession” since the beginning of 2022 has quadrupled.

Everyone is looking for an answer that doesn’t exist. We cannot predict if there will be a recession or how long it will last. We know that recessions are a regular, unavoidable part of economic cycles.

Here are a few questions to ask yourself in preparation for a recession:

Do I have job security?
Does my spouse have job security?
What fixed expenses do I have? (Examples may include mortgage payments, car payments, daycare payments, and recurring health care payments)
Do I have emergency savings to pay for my fixed expenses?
Would a recession change my current investment strategy?
Does anyone really know if there is a recession coming?

We also know that compared to the recent past, US Households currently have more cash and cash equivalents in their bank accounts. This chart, dating back to 2015, shows the rise of cash on hand for US Households. We may be more prepared for a recessionary period than we think we are. As the previous recession preparation questions suggest, it is essential to have liquidity during a recessionary period to help pay for fixed costs, protect against a loss of income, and to avoid selling investments while the markets are volatile.

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Source: A Wealth of Common Sense

If you need help answering any of the questions above, please contact your team of advisors at Human Investing.

4: Mortgage rates doubled in Q2 2022

Mortgage rates, as you may have seen, surged in Q2’22. Average mortgage rates went from 3% to 6%, which is the most significant one-week increase in interest rates since 1987. At about 6%, 30-year mortgage rates are back to where they were in November 2008. 

We wanted to share this chart which illustrates the increase in mortgage payments since 2015. As you can see, monthly mortgage payments have increased over time, but 2022 has experienced a remarkable surge in average monthly mortgage payments.

Let’s see how the rest of summer unfolds. Suppose you are in the market to buy a home. In that case, we highly recommend understanding all the costs associated with purchasing a home, including closing costs, property taxes, monthly payments, and repairs.

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Source: Redfin

For a more in-depth overview, read this Redfin article.

Our team is always here for you should you have any questions or concerns about your financial landscape.

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Season’s Greetings! We have assembled this post during the final days of 2021. We hope you have enjoyed some rest these past few days and you are heading into 2022 feeling optimistic.

As promised, we are sharing some of our favorite charts from Q4. Specifically, we included charts that include information about the increase in Social Security benefits, the S&P500’s 69 all-time highs in 2021, mentioning the S&P500 powerhouses, and reviewing some annual price changes.

1: Social Security and Supplemental Security Income (SSI) benefits will increase 5.9% in 2022.

In October, it was announced that Social Security benefits will increase by 5.9% starting in January 2022. As this chart indicates, the 5.9% increase starting in 2022 is the largest uptick since the 1980’s. This is good news for most people since social security checks will be bigger.

The increase in benefits impacts households who are already taking social security and those who will be taking their benefits soon. If you haven’t already received the COLA notice in the mail, you can access your updated Social Security statements here: my Social Security | SSA

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Source: Lance Lambert

2: The S&P500 reached 69 all-time highs in 2021.

Throughout this past year, the S&P500 hit a new all-time high 69 times. That’s remarkable! You should spend some time looking at this chart, but as a sneak peek, 1995 is the only year that incurred more all-time highs that 2021.

What does this mean for you? Looking back, it means that checking your account balances in 2021 was thrilling if you have exposure to the S&P500. To summarize the year’s performance, the index is up almost 30% since January 1, 2021.

During market years with this many records, the stock market attracts fair-weather fans. Going forward, we recommend that you define and/or revisit your investment goals and stick to your plan as best as possible.

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Source: Charlie Bilello

3: The S&P500 powerhouses.

The S&P500 is a stock market index that measures the performance of about 500 companies in the US. If you have attended one of our group presentations, then you may recognize that we often say that “the S&P500 is synonymous with the US stock market”.

By the end of 2021, there were 6 companies that made up 26% of the market capitalization (# of shares x price of the shares) of the S&P500. These same 6 companies only made up 10% of the S&P500’s total revenue, or the money the companies pulls in from their sales.

This chart made an appearance in our final Charts of the Quarter post for 2021 as a reminder that these six organizations (Microsoft, Apple, Google, Amazon, Tesla, and Meta Platforms) have kept their spots in the starting line-up of the US stock market. We can also give kudos to these six companies for the S&P500’s returns in the recent past. Since 26% of the S&P500 has strong performance, the 2021 bad apples received less attention.

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Source: @Sean_YCharts

4: Picking trends is (still) hard.

We assembled a chart with two companies that we rely on everyday — Peloton and Zoom. Zoom has been crucial for engaging with our clients these past two years and many Human Investing employees converted to Peloton workouts mid-pandemic. Look at this chart! There is a disconnect between Zoom and Peloton’s abysmal performance in 2021 and our expectations as loyal customers.

Let this chart be a reminder that picking trends in the stock market has always been challenging and it will continue to be going forward. Investing in individual companies can lead to a make-or-break situation.

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Source: @Sean_YCharts

5: Inflation took over headlines in Q4 2021.

Overall, the CPI (Consumer Price Index) rose 6.2% from October 2020 to October 2021. This is the fastest annual increase since 1990. While it is true that things got more expensive this past year, inflation is a delicate topic because every year some things get more expensive while other things become more affordable. For this reason, we try to avoid generalizations about inflation.

As the chart indicates, this past year we have experienced a concentrated increase in transportation costs like fuel oil, motor fuel, car and truck rentals, piped utility gas service, and used cars and trucks. Meanwhile, the average cost of an airline ticket has decreased compared to 2020.

We agree that inflation is uncomfortable. That is a true statement even though inflation is always moving and rarely a stable metric.

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Source: The New York Times

That is a wrap for the 2021 year. We wish you the very best 2022! — Your Human Investing Team

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Welcome to fall! Before we race to the pumpkin patch, let’s look back on July, August and September. We selected 5 different visuals from the past quarter to share with you.

1: The S&P 500 Reaches an All-time High

On September 2, 2021, the S&P 500 closed at an all-time high (see chart). While this is a record-breaking statistic, the S&P 500 has also experienced more than 50 all-time highs in 2021. Prior to this year, there are only six other calendar years with at least 50 record closes (2017, 2014, and 1995 are the most recent years).

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As a result of these market highs, we have noticed heightened concerns about a looming market crash. Because what goes up, must come down?? The two most common concerns we hear are:

1. “I know the market is at an all-time high. I want to sell my investments today and reinvest these dollars when the market crashes in the coming months”. See chart 2 for our typical response.

2. “I know the market is going to crash. I want to move all my money into something safe like cash or bonds. What do you think I should do?”

If you are someone that is worrying about your investments (maybe it’s something entirely different from the two concerns listed above), please reach out to our team so we can listen to your concerns and build an investment strategy for you going forward. To be frank, the timeline for spending 401(k) dollars impacts the advice we give. For example, we would give different advice to someone planning to spend their 401(k) savings soon than to someone in their mid-forties with no intentions of spending their 401(k) soon.

2: What About This Looming Market Crash?

If you have setup a 401(k) account, then you are investing your dollars every single pay period. This phenomenon is called dollar-cost averaging and it works really well for most retirement accounts. If you have a 401(k) account, we recommend leaning into dollar-cost averaging, setting up annual account rebalancing, and assessing your account strategy periodically. Of course, this strategy is not one-size-fits-all. Some investors prefer to intervene with their investments if they are predicting an upcoming market crash.

That being said, we recently found this article by Nick Maggiulli that compares gradually investing a consistent dollar amount (like per paycheck 401(k) contributions) to saving dollars up to buy a market dip. Please take the time to read the whole article, but if you want the cliff notes here you are:

• The article points out that stockpiling cash in anticipation of a market crash is an unlikely strategy to win out in the long run.

• Trying to buy the dip usually fails because large dips are rare. As a result, the strategy turns into stockpiling cash which is not a good idea for the long-term.

• If you do want to try and buy the dip, think about getting your cash invested in the stock market as soon as possible.

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For some help interpreting this chart, here is the text directly from Nick Maggulii’s blog post. “This chart shows that there is roughly a one in four chance of beating DCA when using a Buy the Dip strategy with a 10%-20% dip threshold. If you were to use a 50% dip threshold, the chance of outperforming DCA increases to nearly 40%. But this doesn’t come without a cost. Because while you are more likely to outperform DCA when using a bigger dip threshold, you also underperform by more (on average) as well.”

3: Monthly Child Tax Payments

July 2021 was the beginning of the monthly child tax credit payment for parents. Did you see our 20-minute webinar about the child tax credit, why it matters, and some financial planning considerations for parents?

Flash-forward a few months, and we have found a study of 1,514 American parents who received the monthly child tax credit payments. As you can see, most parents have saved their payments for emergencies which is a disciplined usage of the excess cash.

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4: Vanguard Announces Lower Fees for Target Retirement Funds

In late August, Vanguard announced they are lowering the expense ratio (the cost) of their target-date funds by February 2022. We believe this is good news for all investors using Vanguard target retirement funds!

Vanguard will lower the expense ratio to 8 basis points meanwhile they are committed to maintaining the same glidepath methodology and asset allocation.

To articulate the cost savings, we assembled a table showing the potential impact for someone invested in a Vanguard target retirement fund with the updated expense ratio. For someone with $100,000 in a Vanguard target retirement fund, this lowered expense ratio means immediate annual savings. Just to be clear, the $90 vs $80 are annual fees which add up to be meaningful cost savings for you over a long period of time. Cheers!

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5: Be Careful who you Get Advice From

How many self-proclaimed market savants are sharing their opinions with the world? So many! Be careful who you listen to. We couldn’t help but include some humor in this post. Feel free to relish in the ridiculousness of this chart.

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That concludes our Charts of Q3 2021 post. We will be assembling the next Charts of the Quarter post before we know it. Take care! — Your Human Investing Team

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Summer is here! We hope you are enjoying the extended daylight and are spending time with family and friends throughout the upcoming months. To recap the past quarter, we are sharing some topical charts with you.

INFLATION

Recently, the US inflation rate reached a 13-year high. As a result, there has been an exhausting number of headlines published about inflation recently. Unfortunately, inflation buzz creates a lot of noise from people trying to predict something that is not predictable. Will interest rates rise? Will there be a surge in US spending or saving? Will more production occur inside the US? As the chart indicates, inflation itself is always fluctuating. Due to the unpredictable nature of inflation, we do not recommend making financial decisions based on headlines.

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Source: The NY Times

THE RISE OF GASOLINE PRICES

Remember when oil producers had to find places to store their oil during the early stages of the pandemic? Since then, the price of gasoline has been steadily rising. If you get sticker-shock from filling up your car’s tank of gas, remember that there are many factors that affect oil and gas prices. For example, seasonal demand, commodities speculation, and the value of a dollar all impact gas prices. To reduce the amount of money you spend on gas this summer, we recommend inflating your tires to increase fuel efficiency or simply riding a bicycle this summer!  

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Real Estate Prices are Soaring

We included a chart about housing prices in our Q1 Charts post, and for homebuyers there hasn’t been much great news since then. Real estate prices are still surging. For a visual, see the chart comparing the rise of home prices in Portland, Seattle, San Francisco, and the National Case-Shiller index since 2018.

Real estate prices are a result of inventory issues, the heightened cost of lumber for new construction (see chart below), and many people relocating their residency since the pandemic. If you haven’t experienced it yourself, we all know someone who has been outbid on several houses making the home buying experience feel impossible.

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The Child Tax Credit Revamp

The Biden Administration revamped the child tax credit for 2021. The updates include a larger credit amount, monthly payments, more age eligibility, and a fully refundable credit. Overall, this is good news for parents. Like most tax code updates, this child tax credit will certainly cause some confusion. These two visuals should help outline the general updates as well as an example of how the updates would impact the fictitious Mohamed family of four.

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As you can see, the Mohamed family is expecting to receive both more money and money sooner than they did last year. However, they will receive a $3,000 credit at the time of their tax return compared to $4,000 in 2020. Given the complexities of the new child tax credit, our team will continue to publish information on this topic in the coming months.

Robinhood Reveals Revenue

Robinhood recently publicized their financial statements in preparation for their Initial Public Offering. In their S-1 public filing, Robinhood disclosed that more than 50% of their users are first-time investors. That comes as no surprise given their reputation of being a democratizing platform. Over the past several months, our team at Human Investing has fielded more commentary about investing with Robinhood than ever before.

Prior to the release of the S-1 public filing, it was easy to imagine the average Robinhood investor as someone with a few extra dollars and a desire to buy/sell individual stocks. However, once Robinhood disclosed the breakout of their revenue we can see that most of their earnings (at least in Q1’21) is derived from investors trading options trading options as opposed to buying/selling individual equities.

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Source: @rexsalisbury

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Source: Robinhood’s S-1

That concludes our Q2 2021 Charts, and we look forward to sharing more charts with you in the coming months.

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The start to 2021 was eventful for our team at Human Investing. Since the beginning of January, we watched the markets and headlines respond to the capital siege, the GameStop phenomenon, and another stimulus bill. Now that Q1 2021 is over, our team is sharing five of our favorite charts we have seen circulate this quarter.  Enjoy!  

Chart 1: Gamestop

January 2021 was the GameStop month. Even though it seems like this frenzy is over, we expect the GameStop phenomenon to remain relevant in the months and years to come. We are sharing a simple chart that captures both the price spike and trading volume spike.

While there are many takeaways from this short squeeze, one important reminder is to always keep your investment strategy the forefront of your decision-making. When will you be spending your dollars? What will the dollars be spent on? Remember that both your savings and your investment strategies are likely different from your neighbors, your headlines, and your influencers.  

Chart 2: Bull Markets

This chart highlights the annualized returns of recent bull markets.  As illustrated at the bottom, 2020 was an extraordinary year for market returns with an annualized return of 79.4%. This annualized return was not predictable, but it shows the importance of staying invested during a market downturn.

What does this mean for you? Do not take your investment returns this past year for granted! If you have created an investment strategy, stick to your game-plan. Past results do not guarantee similar future returns.

Ally Invest, 2021

Chart 3: Price Changes

If you attended one of our group presentations recently, then you may have already seen this inflation chart. As illustrated in this chart, we want to emphasize that hospital services and college tuition are 165% more expensive today than in the year 2000. Let this chart be a reminder to plan for these big expenditures. Also, next time you watch TV – give it some appreciation. TV’s are a prime example of a technology that has not only gotten smarter and faster, but also more affordable over the years.

AEI, 2021

Chart 4: U.S. Savings Rate

This chart visualizes the U.S. Savings Rate before the pandemic, during the height of the pandemic, and the savings rate five months after the stay-at-home orders were released in the US. Notice that the precautionary savings increased significantly in April and May 2020, but has decreased ever since?  We encourage you to review your precautionary or “emergency savings” and to contact our team to strategize ways to make it happen.

Chart 5: Home Sales

As Portland residents, we know how difficult it is to buy a home here. According to Redfin, the median sale price in Portland is up 22.4% year-over-year and the median days on the market is down 67.5%. While this may be a favorable scenario for current home sellers, it is obviously a distressing situation for home buyers. We recommend reading the New York Times article for a full analysis on the national housing inventory and reasons why the number of homes for sale has plummeted.

NYTimes, 2021

That concludes our Q1 2021 Charts post. We promise to post our favorite charts from Q2 2021 this summer!  

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As 2020 comes to an end, our team is sharing seven charts that help summarize some of the puzzling financial activity we experienced this year. We have been including these charts in our group education meetings as visual aids to help explain 2020’s market volatility. For the readers who did not attend one of these meetings, we made this post for you to reference in the future.

2020 was a year that represented a disconnect between the stock market and the economy for many investors. On one hand, the stock market (represented by the S&P 500) is up over 14% this year. On the other hand, many local businesses and industries have been devastated by the pandemic. Investors had a difficult time sorting out those two facts, especially between late March and September.

In order to rationalize 2020 market returns, we look to the five largest companies in the S&P 500 (in chart 1 and 2) that have led the charge in terms in performance. Specifically, these five companies are Microsoft, Apple, Amazon, Google, and Facebook. Compared to industries like airlines, hotels, and restaurants, these five companies were able to offer services and be agile in the pandemic. Couple that with those five companies making up over 21% of the stock market (the largest piece of the pie chart in the last years) and you can create a narrative of why the market has performed well while areas of the economy have struggled.

Repeat after me, past performance does not guarantee future results. It’s important to remember that now more than ever because 2020 produced some impressive returns. Combine that with 2020 being a year where Robinhood investors, or in other words younger investors who had more free time on their hands, became interested in the stock market, options trading, crypto currencies, and other investments. What’s interesting about 2020 is that many of the names or asset classes that people are familiar with or use every day happened to be some of the best performers of the year. Years like this don’t always play out this way, but Peter Lynch’s quote of “Invest in what you know” certainty paid off this year with individual’s taking products that they own/use frequently and investing in them. The above provides a sampling of some of top performers of 2020. As you can see you probably interact with of these line items daily. 

While what we have experienced nationally (and globally) this year has been unprecedented, in the context of the last 40 years of market returns it is not abnormal. Since the start of 1980, the S&P500 (excluding dividends) has returned an annualized 9%. Despite having average intra-year drops of 13.8%, the market has finished positive 75% of the time. Short-term market volatility has paved the way to long-term investment returns, and 2020 has proven no different.

For us investors, this is a reminder to remain invested through the market turbulence. Patience is a requirement for long-term success. Warren Buffet said it best with his quote, 

“The stock market is a device for transferring money from the impatient to the patient.” - Warren Buffet

This chart illustrates the consequences of hitting the “panic button” when we experience market turbulence. If we buckle up and hang on tight, there is potential to see long term growth versus throwing on the parachute and cashing out (hitting that proverbial panic button). 

Opportunists unite. With historically low interest rates, many people have taken this opportunity to refinance their mortgages. By refinancing their mortgages, individuals and families have improved monthly cash flow, decreased the amount of interest paid over the life of their loan (often saving tens of thousands of dollars over a 15-, 20-, or 30-year period), and shortened the length of their mortgage. To join the rest of the opportunists, see our post Refinancing Your Mortgage: A How to Guide. 

In March alone, the number of initial unemployment insurance (UI) claims increased by more than 3,000% as businesses closed to slow the spread of the coronavirus. People have suffered this year, and none of us will look back at this time and wish we did less.

This graph focuses on unemployment, but we know that hospitalizations, closures, and fear also increased in the first half of 2020. In a time of desperation, our communities responded to the suffering in an inspiring way. Specifically, the number of small charitable donations ($250 or less) increased 19.2% over the first six months of 2020 compared to 2019. You know someone who has been unemployed this year, and you also know someone who used dollars to alleviate some of the widespread grief.

We hope these visuals help you digest some financial information from this past year. We don’t know how 2021 will unfold, but we do know that market timing is dangerous and most of the time impossible. Staying the course is candidly a boring investment strategy, but one that typically yields the best results.  

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