Broker Check

Horizon Advisor Network Investment Committee December 6, 2021

Executive Summary

  • After rebounding strongly in October, the markets experienced a second bout of volatility caused by renewed uncertainty, as a new COVID-19 variant was discovered to be spreading quickly around the globe.
  • Additionally, inflation hit a new 30 year high, and the Federal Reserve Bank finally acknowledged that these pressures were more than just “transitory”.
  • On a more positive note, many forward looking indicators are pointing to additional strength and growth in the economy.
  • During times of uncertainty, it is important to stay focused on the major fundamentals of successful investing, including disciplined diversification and regular rebalancing of your portfolios, which uses the volatility for your benefit.
  • We will continue our mission to monitor trends on a real time basis, while trying to cut through the news and noise of the day, to responsibly manage the resources you entrust to us.

The Horizon Advisor Network Investment Committee met on the afternoon of December 6th to review recent economic data, market strategist outlooks and the performance of the various model portfolios managed by the committee. To that point, our portfolio models continue to perform in line or above the risk-adjusted, index-based benchmarks over the last one-, three- and five-year periods of time.

As we have been saying in these reports since the middle of the year, we expected to see an uptick in volatility at some point. The last three months have seen that play out, both to the downside and the upside. The market saw its first 5% pullback in nearly a year in September, followed by a strong rebound in October, as third-quarter corporate earnings and corporate outlooks exceeded expectations by wide margins. 

Things turned south again in November as the Federal Reserve Bank finally admitted that inflation was more persistent than expected. Therefore, they may need to take additional steps to combat this. This, combined with the Thanksgiving weekend announcement of the new Omicron variant of COVID-19, caused the markets to decline sharply once again. Large-cap stocks, held up again by leading technology companies, limited the damage to approximately 5%. However, other parts of the market including, small cap and emerging market stocks, along with oil prices, saw much sharper pullbacks of 10% or more in just a few days.

We will continue to monitor the impact of the new variant on the economy. The initial, knee-jerk reactions in the markets were partly based on fear that governments around the globe could implement additional new restrictions which could further dent production and supply chains. In the chart below you can see that inflation on core goods has moved up far faster than on core services. We know that some countries in Southeast Asia, including China have a zero-tolerance policy for COVID. This means a single case can shut down ports, cities or even Shanghai Disney as we saw in late October.

Source: Charles Schwab, Bloomberg, as of 10/31/2021

Inflation measures continue to move up at the highest rates we have seen since the early 80’s. In congressional testimony in November, Fed Chairman Jay Powell finally admitted that inflation pressures were more persistent than expected. He stated that he was officially retiring the word “transitory”, a word that he and Treasury Secretary Janet Yellen had used many, many times over the last six months, from their narrative and lexicon. 

There is a belief that inflation pressures on the capital goods side of the economy will eventually start to fade by mid-year ‘22, as supply chains catch up to demand. Demand may lessen further without additional direct stimulus payments from the Federal Government to individuals. On the flip side, we know that certain parts of the inflation story, such as rent increases and wage gains will likely persist into the future and leave inflation at a higher level than we have seen in several decades. Against this backdrop, the Fed is considering tapering their bond purchases more quickly than originally outlined. The market is now pricing in the Fed raising interest rates by as early as next spring. We will hear more from them as they meet next week.

Despite the negative news and noise that you hear in the media daily, there are some reasons for optimism towards future economic growth in the United States over the next six months or so based on recent economic reports. The Atlanta Fed’s real time GDP tracker is showing economic activity rebounding strongly in the fourth quarter after hitting a speed bump in the previous three months.

Additionally, as you can see from the chart above, the Conference Board's Leading Economic Index increased .9% the previous month “suggesting the current economic expansion will continue into 2022 and may even gain some momentum in the final months of the year. Gains were widespread among the leading indicators.” Finally, the ISM Manufacturing Report picked up steam in November, while the Services Report increased to 69.1, an all-time record, exceeding October’s record report by 2.4%.

All of this leads the committee to two different conclusions. First, despite the negative headlines, we are doing our best to look past the noise, and we are cautiously optimistic about economic growth and corporate profits over the near term. We will continue to balance this outlook with the uncertainty arising from the new variant, the inflation outlook, and ongoing partisan policy squabbling on Capitol Hill.

This leads to the second point, which is the importance of maintaining disciplined diversification in your portfolio. At times like this, sharp market moves and scary headlines can cause people to want to do something. This almost always leads to negative outcomes. As Warren Buffett has said “doing nothing, when it is the right thing, is one of the most difficult things for a successful investor to do”.

While we expect the possibility of higher volatility to persist, the committee is making no major changes to our model portfolios, as we feel that the adjustments that had been made in October and November have positioned us appropriately for the economic outlook and current investment landscape. 

As always, if you have questions about your specific situation, please reach out to your advisor to discuss this more fully. We are here to serve you, our trusted friends and clients. We hope that amid the holiday season that you are able to enjoy the gifts and blessings that life has brought to you and your family. We remember that we are blessed to help and serve you. 

The views stated are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.


Jesse Hurst - Chair, Impel Wealth Management

Nathan Ollish - Impel Wealth Management

Clint Gautreau, Horizon Financial Group

Kevin Myers, ATL Global

Joy Schlie, FHT Financial Advisors

Dusty Green, Spencer Financial Inc.


Jesse W. Hurst, CFP®, AIF®
Financial Advisor

*Award Recipient Jesse Hurst 

*The 2021 ranking of the Forbes’ Best–in–State Wealth Advisors1 list was developed by SHOOK Research and is based on in–person and telephone due–diligence meetings to evaluate each advisor qualitatively and on a ranking algorithm that includes client retention, industry experience, review of compliance records, firm nominations, and quantitative criteria (including assets under management and revenue generated for their firms). Overall, approximately 32,725 advisors were considered, and 5,000 (approximately 15.3 percent of candidates) were recognized. The full methodology2 that Forbes developed in partnership with SHOOK Research is available at

1 This recognition and the due–diligence process conducted are not indicative of the advisor's future performance. Your experience may vary. Winners are organized and ranked by state. Some states may have more advisors than others. You are encouraged to conduct your own research to determine if the advisor is right for you. 

2 Portfolio performance is not a criterion due to varying client objectives and lack of audited data. SHOOK does not receive a fee in exchange for rankings.