Greetings! I hope you enjoyed happy, safe and healthy New Year!   

2021 Review & A Look Ahead Into 2022

2021 was characterized by a year with a nation working through the impacts of a virus and deep political division, but from a financial perspective, 2021 was a truly prosperous year. Domestic financial markets finished the year near an all-time high, capping a remarkable decade during which equity markets increased by approximately 15% each year. But the strength extends far wider. Home prices are at a record high, having far eclipsed the period prior to the housing crisis last decade. Business valuations are high, with record amounts of capital flowing into venture capital and private equity funds. Labor markets are extremely tight, with more job openings than there currently are unemployed workers to fill them. In November alone, 4.5 million workers quit their jobs, mainly to pursue other work it appears. Disposable income is plentiful, with the burden of debt and other financial obligations near a record low.

Yet underneath the surface lies a faint, hard to pinpoint, sense of that the season might be changing, like that first cool, late summer night. Inflationary readings are at 40-year highs and, in response, the Federal Reserve has accelerated the withdrawal of monetary support for markets and indicated they will raise interest rates three times each this year and next. Equity market valuations are approaching, or have already eclipsed, valuations last seen during the “Tech Bubble” of the late 1990s / early 2000s. Major indices are becoming increasingly concentrated in a couple handfuls of very large companies, with half of the companies in the broad Russell 3000 Index down 20% from their recent high. Outside the financial realm, energy supplies are concerningly tight, political polarization remains as high as ever, geopolitical tensions are rising and a new wave of COVID-19, the omicron variant, is rapidly surging across the globe.

Risk and uncertainty, as well as reward, are ever present in financial markets. Our approach, as always, is to emphasize balance and prudence. Participate judiciously in the upside, while avoiding the most speculative activities.

As an organization, our investment team is always following the market and assessing the current environment so we can be prepared to act if the market becomes turbulent. This is the very reason why our service team spends the time with you to understand you and your unique circumstances, then works with you to ensure the proper asset allocation and a sound financial, estate and tax plan are in place to help you navigate turbulent waters, if they should arise. 

As a firm, we have invested in greater investment, client service, tax and estate planning expertise over the past few years so we have the capacity to know and understand each of the following for all our clients.

  • The location and amounts of all your assets 
  • Your complete asset allocation, for both investments we manage and ones you manage 
  • The source and stability of your income, as well as your future liquidity and income needs 
  • Your willingness and ability to take risk 
  • Your estate plan and tax strategy 

We know this approach works because it has been tried and tested, many times across many decades and most recently just twenty months ago during the recession and bear market at the onset of the COVID-19 pandemic. Where needed we made proactive asset allocation changes, but mostly clients were able to stay the course and subsequently prosper as a result. 

Update From Our Investment Team

From an investment perspective, whether we own individual stocks, exchange traded funds, mutual funds, corporate bonds, private equity, real estate or another type of investment, our focus is the underlying fundamentals and cash flow. For the individual businesses that comprise the majority of client portfolios, we are focused on owning growing, profitable, market-leading businesses that provide essential products and services. These businesses generate meaningful free cash flows in both good and bad economies and have low or manageable debt burdens that allow them to expand their competitive advantage over time, though especially so during difficult times when competitors may struggle. When markets become turbulent and stock prices decline, when the value of more speculative investments may become permanently impaired, our efforts to understand and appraise the long-term value of the underlying businesses we own gives us the confidence to opportunistically increase our investment at very attractive prices. This is a tactic we employed during the recent pandemic selloff, to great benefit for our clients. 

Zuckerman Investment Group Update

Wrapping up, 2021 was a successful year for both Zuckerman Investment Group clients and the firm itself.  From market appreciation and bringing on new clients, we ended the year with assets under management of $1.1 billion. We made several significant hires, enhancing the investment and financial capabilities of our firm. David Frank joins our investment team, having worked as a senior equity analyst for many years at Columbia Acorn, Jake Kenny joins our finance team, having worked as an auditor at Ernst & Young, and Juan Castellanos-Ramos and Elise Anttonen join us from Indiana University and DePaul University, respectively.  Kelly Palmer, who ran our compliance and operations for 10 years, left the firm and the workforce in July.  We hired Kelly out of college and she possessed all of our firm’s core values. She will be missed.  

Ours is ultimately a human capital business and we continue to look for opportunities to add talented individuals to our firm. In particular, we would be open to introductions to anyone with client service and investment talent.   

We want to thank you for your continued trust and partnership.  We are so very grateful for the personal relationships we have built and strengthened with you over many years. You, the client, truly are the most rewarding and fulfilling part of our job. The highest compliments we receive are the referrals you make, plus the introductions to your children, grandchildren, parents and close friends.   

On a personal note, I wanted to ask if you would please take a few minutes to click here and fill out this short survey.  One of our internal core values is to “get better every day” and we can’t improve as an organization unless we receive feedback from you.  I thank you in advance for your help.  

As we look forward to 2022, on behalf of my father and all the employees at Zuckerman Investment Group, I want to, again, thank you for your continued trust and partnership and wish you a happy, healthy and prosperous 2022.  


Daniel R. Zuckerman 

President and Chief Executive Officer