Fidelity Viewpoints® Market Sense 01-25-2022

[Pages:11]Fidelity Viewpoints?:

Market Sense

The latest headlines, the current market conditions, and what it all means for you.

Fidelity Viewpoints?:

Market Sense

The latest headlines, the current market conditions, and what it all means for you.

Views and opinions expressed in this webcast are those of the speakers. This discussion is for educational purposes and should not be considered investment advice. Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice.

Our Speakers

Host

Jim Armstrong -- Marketing Director, Fidelity Investments

Jim Armstrong is a marketing director in Fidelity's Personal Investing division. In this position, he creates educational content for workplace participants to help with retirement planning and other financial wellness topics. Formerly, Jim distinguished himself as an Emmy-winning journalist, spending 17 years as a television reporter for network affiliates around the country.

Special guest panelists

Jurrien Timmer -- Director of Global Macro, Fidelity Investments

Jurrien Timmer is the director of Global Macro at Fidelity Investments. In this role, he is part of Fidelity's Global Asset Allocation group, where he specializes in asset allocation and global macro strategy. Additionally, he is responsible for analyzing market trends and synthesizing investment perspectives across Asset Management to generate market strategy insights for the media as well as for Fidelity's clients.

Leanna Devinney, CFP? -- Vice President, Branch Leader, Fidelity Investments

Leanna Devinney is responsible for leading one of Fidelity's Investor Centers. In this role, she offers our clients financial and investment guidance, including one-on-one retirement planning, wealth management, income strategies, and college planning services, as well as integrated employer benefits solutions.

Lars Schuster Institutional Portfolio Manager, Fidelity Investments .Lars Schuster is an institutional portfolio manager at Strategic Advisers LLC, a registered investment adviser

and a Fidelity Investments company. In this role, he is a member of the Investment management team and is responsible for delivering Strategic Advisers' managed account investment philosophy, process, and ongoing activities to a wide range of investors.

Equity Drawdowns

For illustrative purposes only. Past performance is no guarantee of future results. Data source: FMRCo, Bloomberg. Haver Analytics, FactSet. Data as of January 24, 2022.

Market Volatility is Normal--Staying the Course is Critical

Despite declines, markets tend to recover and post gains

S&P 500? INDEX ANNUAL TOTAL RETURNS & INTRA-YEAR DECLINES: 1980?2021

50%

Annual Total Return

Max Intra-year Decline

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50% 1980

1984

1988

1992

1996

2000

2004

2008

2012

2016

2020

Past performance is no guarantee of future results. It is not possible to invest directly in an index. Returns are based on index price appreciation and dividends. Intra-year drops refer to the largest index drop from a peak to a trough during the year. For illustrative purposes only. See appendix for index definition. Data as of 12/31/21. Source: Standard & Poor's, Bloomberg Finance L.P.

A Disciplined Process to Look Beyond Near-Term Events

Current position of U.S. in business cycle serves as primary lens for active asset allocation decisions

BUSINESS CYCLE FRAMEWORK

A growth recession is a significant decline in activity relative to a country's long-term economic potential. Note: The diagram above is a hypothetical illustration of the business cycle, the pattern of cyclical fluctuations in an economy over a few years that can influence asset returns over an intermediate-term horizon. There is not always a chronological, linear progression among the phases of the business cycle, and there have been cycles when the economy has skipped a phase or retraced an earlier one. Source: Fidelity Investments (AART), as of 12/31/21.

Missing Out on Best Days Can Be Costly

Hypothetical growth of $10,000 invested in S&P Index

January 1, 1980 ? August 31, 2020

$952,512

?38%

$590,571

$425,369

?93%

$154,184

$68,033

Invested all days

Missing

Missing

Missing

Missing

best 5 days best 10 days best 30 days best 50 days

Past performance is no guarantee of future results. Source:FMRCo, Asset Allocation Research Team, as of August 31, 2020.

The hypothetical example assumes an investment that tracks the returns of the S&P 500? Index and includes dividend reinvestment but does not reflect the impact of taxes, which would lower these figures. There is volatility in the market, and a sale at any point in time could result in a gain or loss. Your own investing experience will differ, including the possibility of loss. You cannot invest directly in an index. The S&P 500? Index, a market capitalization?weighted index of common stocks, is a registered trademark of The McGraw-Hill Companies, Inc., and has been licensed for use by Fidelity Distributors Corporation. This example is for illustrative purposes only and does not represent the performance of any security. Consider your current and anticipated investment horizon when making an investment decision, as the illustration may not reflect this. The return used in this example is not guaranteed.

Over Time, Stocks Have Generally Followed Earnings

In the short-term, stock prices can disconnect from earnings trend; market tops tend to occur

when earnings fall

S&P 500 INDEX VS. OPERATING EARNINGS (LOG SCALE)

5120 2560

S&P 500 Index

256

S&P 500 Earnings per share, last 12M

128

1280

64

S&P 500 Index

S&P 500 Earnings per Share, Last 12M

640

32

320 16

160 8

80

4 40

20 1961

1966

1971

1976

1981

1986

1991

1996

2001

2006

2011

2016

2 2021

Source: Bloomberg Finance L.P. as of 12/31/21. Past performance is no guarantee of future results. Grey columns represent U.S. recessions as defined by National Bureau of Economic Research.

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