Client Newsletter 1Q22

Dear Ambassador Family,

Tempered Outlook on the New Year

Investments at times decline even if bull markets were to continue.

Most of you know and expect this.  However, this reality particularly hits hard for those who spend too much time watching screens or expect to live off their money, in vain hoping that it keeps growing in a straight, uninterrupted line.

We have enjoyed another good year in the markets in 2021.  2022 might be different.

Unlike 2020, not everything in the market rose.  6 stocks drove the majority of returns in the S&P 500.  Commodities in general rose, but precious metals declined.  Cash and fixed income posted flat to slightly negative returns.

However, small-cap and international developed equities lagged large-cap US equities.  Emerging markets actually finished down in 2021.  Fortunately, you had very limited exposure to these assets.

We believe 2022 will bring more volatility and lower returns.  Valuations are high, inflation also remains high, and the Fed is about to raise interest rates and further tighten liquidity.  Additionally, government stimulus is decelerating, companies have loaded up on a lot of debt, and geopolitics (China/Taiwan, Mideast, Russia/Ukraine) overhang the markets.

Not everything has to be bleak. 

In our view, 2022 might end up being less positive compared to last year.  Even with a rate increase, though, interest rates adjusted for inflation are likely to remain negative for a while.  Though indices remain near historical highs, many companies have traded closer to the lows of the year.

Your investments are positioned modestly cautiously relative to risk.  “Vanilla” is an apt description of current positioning.

Staples in your portfolio include large-cap (mostly US) equities, commodities, gold, and hedged equity manager anchored by fixed income with low-interest rates and credit risk.  While we monitor many markets for other opportunities, high valuations and deteriorating fundamentals deter us for now from investing in most other asset classes.


401(k) Limits For 2022

Thanks to inflation, the IRS has released cost-of-living adjustments for taxpayers in 2022. This means you can save more in your 401(k) account this year. Let’s take a closer look:

  1. 401(k) contribution limits are now set at $20,500. That’s a $1,000 increase in savings.
  2. Catch-up contributions will remain at $6,500.
  3. Participants 50+ can save up to $27,000 using their catch-up contributions.
  4. Contributions to SEP accounts have also increased from $58,000 to $61,000.
  5. SIMPLE salary deferral contributions are now maxed out at $14,000.
  6. Catch-up contributions for SIMPLE IRAs remain unchanged at $3,000.
  7. IRA contributions limits will stay the same at $6,000 for the fourth year in a row for those under 50.
  8. Those over 50+ can save a max of $7,000 this year in an IRA.

I always encourage my clients to save what they can for their future.

We can also discuss the possible tax advantages of contributing to a tax-deferred account.

If you are ready to take the next step, please schedule a tax planning phone call with me to go over specifics.


How We Invest: Heed the Sages of Ages Past

Some of you might get tired of my reminders about prudence both in how we work with you and monitor your investments.

Rather than hearing from me, here are some nuggets of wisdom from “smart money” investors of decades past.

  1. Protect your downside.

    RULE 2: DON’T LOSE MONEY: This may seem naïve, but believe me, it isn’t. If you want to be wealthy, you must not lose money, or I should say you should not lose BIG money.  Absurd rule, silly rule?  Maybe, but MOST PEOPLE LOSE MONEY on disastrous investments, gambling, rotten business deals, greed, poor timing.  Yes, after almost five decades of investing and talking to investors, I can tell you that most people definitely DO lose money, lose big time – in the stock market, in options and futures, in real estate, in bad loans, in mindless gambling, and in their own business.”[1]

  2. Don’t invest just because you have to. Invest because you see opportunity.

    RULE 3: RICH MAN, POOR MAN: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader.  The arbitrage that the wealthy investor enjoys is that HE DOESN’T NEED THE MARKETS.  I can’t begin to tell you what a difference that makes, both in one’s mental attitude and in the way one actually handles one’s money.

    ‘He who doesn’t understand interest pays it.’  The little guy is the typical American, and he’s deeply in debt.

    The little guy is in hock up to his ears.  As a result, he’s always sweating – sweating to make payments on his house, his refrigerator, his car or his lawn mower.  He’s impatient, and he feels perpetually put upon.  He tells himself that he has to make money – fast.  And he dreams of those big juicy mega-bucks.  In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles his money away on senseless schemes.  In short, this “money-nerd” dashing up his financial down-escalator.

    But here’s the ironic part of it.  If, from the beginning, the little guy had adopted a strict policy of never spending more than he had made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in that time he’d have money coming in daily, weekly, monthly just like the rich man.  The little guy would have become a financial winner, instead of a pathetic loser.”[2]

  3. Don’t overstay your welcome.

“Bulls make money, bears make money.  Pigs get slaughtered.”[3]

What Is Elder Law & When Do You Need It?

Elder law attorneys help seniors and their family caregivers with legal issues and planning strategies. When used properly, these attorneys can help with tax planning, disability planning, avoiding probate, disbursement of an estate, preserving assets, and many other legal issues.

I bring this up because 2021 was full of elder law planning discussions and needs. We have referred many clients to elder law attorneys in the last 14 months.

For those who are aging or have aging parents, an asset preservation trust (APT) might help you pass on your life saving to the next generation(s).

If you are worried about spending down your savings for care and living expenses, let’s schedule a meeting to talk about an APT.

If I think it might be a good fit for your family, I will refer you to a couple of attorneys who specialize in elder law.

A little planning now can save you and your loved ones a big headache down the road. Let’s work to get your affairs in order so that your kids are not left to pick up the pieces once you’re gone.


As you set your New Year’s resolutions, I encourage you to be proactive with your financial planning.  You can control your future, but it’s up to you to make it happen.

Now is the time to set new goals and dreams for the year. I am here to cheer you on along the way.

Let’s make 2022 a great one!


Petr Burunov, CFP®
President / Wealth Strategist


[1] Richard Russell, Dow Theory Newsletters, July 17, 1996 on cited in Jane A. Williams, A Bluestocking Guide: Economics based on What Ever Happened to Penny Candy?, (Eagle, ID: Bluestocking Press, 2015).

[2] Richard Russell, Dow Theory Newsletters, July 17, 1996 on cited in Jane A. Williams, A Bluestocking Guide: Economics based on What Ever Happened to Penny Candy?, (Eagle, ID: Bluestocking Press, 2015).

[3] J. Robert Bloom, commentator on MSNBC, President and Chief Market Strategist in the early 2000’s, FIS Asset Management North America.

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