what matters most: your timing

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

FOURTH QUARTER 2021

Heading Toward the Finish Line

What Matters Most: Your TimingAs an investor, the only calendar that should really matter to you is yours—the date you start investing toward a goal, the

dates you contribute more of your hard-earned money, and the date you need to use your accumulated funds. All of that could

happen on any day of the year.

Even so, the markets measure progress in terms of 12-month stretches that start on the first day of the year and end on the last.

Significance is given to January 1-December 31 performance.

Here we are closing in on the end of the second year of a global pandemic. Two years that no one alive today will ever forget.

If you’ve been investing during this period, the experience is likely to have made a lasting impression on you, too. Let’s explore

where we’ve been and what may be ahead.

College tuition du

e!

Pick up boat! Retire!

A Period Without PrecedentChances are that you recognize the below statement. It’s true—believe it! To invest is to expect to be surprised by the

unpredictable.

The COVID-19 pandemic that broke out early in 2020 and continued throughout 2021 resulted in heartbreaking suffering

and loss for millions around the world. As would be expected, financial markets had an immediate negative reaction as

investors anticipated that severe economic damage would result from economies shutting down.

But the history-making snapback of the U.S. stock markets—a record 140 days to recover from a 34% decline—surprised

even the most expert investors. Past performance would not have predicted the strong recovery witnessed after the

darkest days of last March.

This year there’s been more of the same in the form of resurgent economic growth and extraordinary gains, including

some that you may have participated in.

Past performance is no guarantee of future results.

The U.S. Economy: Back with a VengeanceThe greatest economy in the world was the first among developed countries (G-7) to recover from the pandemic. The

U.S. GDP shrunk 31% in the second quarter of last year, only to surge back with 34% growth in the third quarter. It’s

continued to grow at an elevated rate through the summer of 2021.

THE U.S. ECONOMY WON THE RACE TO RETURN TO NORMAL

Source: Bloomberg, Organization for Economic Cooperation and Development

Cumulative GDP change Q4 2019 to Q2 20211%

0%

-1%

-2%

-3%

-4%

-5%

U.K

.

Italy

Fran

ce

Ger

man

y

Euro

are

a

Euro

pean

Uni

on Japa

n

G-7

Cana

da

U.S

.

THE U.S. ECONOMY HAS DEMONSTRATEDITS RESILIENCE

Source: U.S. Bureau of Economic Analysis

Real GDP: Percent change from preceding quarter

[PER

CEN

T] S

EASO

NAL

LY A

DJU

STED

AT

AN

NU

AL R

ATES

353025201510

50

-5-10-15-20-25-30-35

2017Q1 2018Q1 2019Q1 2020Q1 2021Q1

Personal Incomes Hit a High Mark…U.S. personal incomes in March 2021—exactly one year after the pandemic shut the economy down—grew by the highest

rate ever recorded. Such dramatic gains were thanks in part to the effect of the federal stimulus response to last year’s

economic crisis. This isn’t the whole story, of course, as millions lost their jobs during the pandemic, a situation that is

gradually easing.

PERSONAL INCOME HITS RECORD IN MARCH 2021

Shaded areas indicate U.S. recessions.Source: U.S. Bureau of Economic Analysis, Personal Income [PI], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PI, September 12, 2021.

1/1/59-7/1/21

$28,000

$24,000

$20,000

$16,000

$12,000

$8,000

$4,000

$0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

BILL

ION

S O

F DO

LLAR

S

Housing Prices Have Never Been Higher…U.S. home prices hit all-time highs this year—again at the highest annual rate of increase ever. This is a positive if you’re a

homeowner, and it likely contributes to your sense of overall wealth. However, skyrocketing prices can shut others out of

improving their housing conditions.

S&P/CASE-SHILLER U.S. NATIONAL HOME PRICE INDEX

Shaded areas indicate U.S. recessions.Source: S&P Dow Jones Indices LLC, S&P/Case-Shiller U.S. National Home Price Index [CSUSHPINSA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouis-fed.org/series/CSUSHPINSA, September 12, 2021.

Data from 1/1/87-6/1/21 | Index January 2000 = 100

280260240220200180160140120100

8060

1990 1995 2000 2005 2010 2015 2020

+95% since February 2012

U.S. Companies Have Enjoyed Record ProfitabilityNever have U.S. corporations been so profitable, and investors benefitted from this success. Time will tell whether these

levels can be sustained.

S&P 500 QUARTERLY OPERATING PROFIT MARGIN

Source: Yardeni Research, Inc., Standard & Poor’s Corporation (revenues) and I/B/E/S data by Refinitiv (operating EPS).

Data as of 9/7/2021Quarterly (12.5) Average

Average = 8.5%

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 240%

5%

10%

15%Q2

Up, Up, Up, Up, Up, Up and UpAnd in the stock market? With seven consecutive months of positive returns, 2021 hasn’t come anywhere close to being

an average year.

2021 YTD: NOT LIKE THE OTHERS

Performance data quoted represents past performance, which is no guarantee of future results. No change (0.00%) month of September 1979. Source: Yardeni.com, Standard & Poor’s and Haver Analytics. S&P 500 Index is generally considered representative of the U.S. stock market.

Average monthly returns 1928-August 2021

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Average 2021 Monthly Return

Twice as NiceAnd here’s the result when the market just keeps going in one direction—the S&P 500 doubled in record time.

THE S&P 500 DOUBLED IN JUST 354 TRADING DAYS

Performance data quoted represents past performance, which is no guarantee of future results.The S&P 500 Index is considered generally representative of U.S. stocks.

4,8754,665

4,2454,0353,8253,6153,4053,195

2,9852,8602,7102,5602,4102,260

2,110JAN 2020 APR 2020 JUL 2020 OCT 2020 JAN 2021 APR 2021 JUL 2021

March 23, 20202237.40

Aug. 16, 20214479.71

Everybody In!There’s no denying it: 2021 so far has made investing look easy…and just about everyone piled into stocks this year.

Check out the dramatic move below.

Since the rally that started in March 2020, investors have made $24.5 trillion, according to Wilshire Associates—most of

it expressing confidence that economies would bounce back, that healthcare would deliver a vaccine capable of reducing

the suffering and loss, and that consumers would spend and participate again.

RECORD ANNUALIZED INFLOW TO GLOBAL STOCKS IN 2021

Source: BofA Global Investment Strategy, EPFR

Annual equities fund flows

$1,200

$1,000

$800

$600

$400

$200

$0

$-200

$-400 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22

2008

2013

2016

2017

2018

2020

2019

$1.048 trillion

DOLL

ARS

IN B

ILLI

ON

S

In It, Hoping to Win ItThe level of household participation in the stock market today is—you guessed it—unprecedented.

HOUSEHOLDS HAVE NEVER BEEN MORE EXPOSED TO STOCKS

Flow of Funds, Market Value Levels, Computed Series, Households and Nonprofit Organizations, Corporate Equities, AssetSource: Longview Economics, Macrobond

U.S. households’ direct exposure to equities as a % of their financial assets

37.5

32.5

27.5

22.5

17.5

12.5

7.51945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

1968 Q429.7%

2000 Q132.5%

2021 Q136.5%

2009 Q116.5%

1982 Q28.67%

AS %

OF

TOTA

L

Not to Be a Downer But…Such a superlative year so far, what could there possibly be to worry about in the fourth quarter? Plenty.

Here’s just a partial list of concerns for anyone investing in today’s environment.

» New variants that bypass vaccines

» Higher than expected inflation, including surging prices and weakening purchasing power

» Geopolitics

» Economic growth that’s short-lived or muted

» Rising interest rates

» Taxation and proposed changes

» Fed policy errors

» Waning vaccine efficacy

» Technology stocks tumbling

» Supply chain disruptions

» Too many people too exposed to stocks that have done too well

» The debt burden

» Fed may be close to tapering

» The effect of the waning fiscal stimulus

Why Many Are Looking Over Their ShouldersAlso, there’s this: Markets are cyclical—what goes up often needs to come down. The longer the good times go on, the

closer many believe we are to challenging times.

When the market inevitably turns direction, it will be a shock. The U.S. stock market in 2021 has been very friendly to

investors—with the S&P 500 hitting 54 all-time highs through September 9. That many all-time highs in one year has

happened only seven times, according to Dow Jones Market Data.

SOME YEARS DON’T MAKE EVEN ONE ALL-TIME HIGH

Performance data quoted represents past performance, which is no guarantee of future results.Source: Compound Capital Advisors

Based on closing prices through 9/9/2021

NU

MBE

R O

F DA

YS

0

20

40

60

80

100

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

2021 YTD:54 all-time highs in 3 quarters

Drawdowns HappenOn those rare occasions when the market has lost ground this year, investors have largely chosen to view the decline not

as a sign of weakness but as a buying opportunity. Such “buy the dip” optimism kept the market from falling more than

5% until September.

In fact, pullbacks of 5% are to be expected in any given year.

ON AVERAGE, DRAWDOWNS OF:

1% happen every year

5% happen every 1.1 years



20% happen every 4 years

30% happen every 9 years

Source: Compound Capital Advisors

The Smooth Ride Could Be Headed for Some Bumps“It’s been too quiet,” many people have said about the stock market this year. This month appears determined to reverse

the trend, reverting to a historic seasonal pattern. September, which last year saw a near 10% decline, has a well deserved

reputation for being turbulent. October has been even more volatile historically.

MARKET VOLATILITY COULD PICK UP

Performance data quoted represents past performance, which is no guarantee of future results.The VIX (CBOE volatility index) is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. The S&P 500 Index is considered generally representative of U.S. stocks. Source: The Daily Shot, Aug. 25, 2021, Bloomberg, Morgan Stanley Research

Average VIX level by month

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

22

21

20

19

18

17

16

The Downside of DoublingSome people today expect the market to fall by 10% or more because of what’s happened previously after the S&P

has doubled.

CORRECTIONS HAVE HISTORICALLY FOLLOWED MARKET DOUBLES

Performance data quoted represents past performance, which is no guarantee of future results.The S&P 500 Index is considered generally representative of U.S. stocks. Source: Bloomberg

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

5,5254,8904,255

3,620

2,9852,7202,4502,1801,910

1,640

1,370

1,100980855

730

605

+100% +100%

+100%

+100%

+90%

Previous All-time Highs Have Led to Even More Positive Year-endsOn the other side of an argument based entirely on past performance, we can look at this table. In those rare years when

the S&P 500 experienced at least 50 record closes, the years ended positive. It’s been the following year when gains have

edged mostly lower—which may/may not have any bearing on what happens in 2022.

CALENDAR YEARS WITH AT LEAST 50 RECORD CLOSES

Performance data quoted represents past performance, which is no guarantee of future results.Source: Dow Jones Market Data

Data as of 9/10/21

YEAR RECORDSANNUAL %

CHANGE

# OF RECORDS THE NEXT

YEAR

% CHANGE THE NEXT

YEAR

1928 58 37.11% 48 -11.91%

1961 52 23.13% 0 -11.81%

1964 62 12.97% 37 9.06%

1995 77 34.11% 39 20.26%

2014 53 11.39% 10 -0.73%

2017 62 19.42% 19 -6.24%

2021 54 20.83%

ANNUAL % CHANGE

# OF RECORDS THE NEXT

YEAR

% CHANGE THE NEXT

YEAR

Average 23.02% 26 -0.23%

Median 21.27% 28 -3.48%

What Started Well Has Often Ended WellBased solely on where August 2021 ended—up more than 21% year to date—this historical data might suggest where

the year could end. In all but two years, the market continued to gain through the rest of the year.

S&P 500 INDEX PERFORMANCE FOLLOWING >15% YTD GAINS AT END OF AUGUST

Performance data quoted represents past performance, which is no guarantee of future results.Source: Morningstar Direct. Data as of 8/31/21.


-30%

-20%

-10%

0%

10%

20%

30%

40%

1954 1955 1958 1961 1967 1975 1983 1986 1987 1989 1991 1995 1997 2019 2021

20.2 20.0 19.417.1 16.6

26.7

16.919.7

36.2

26.5

19.722.3 21.4

16.720.420.6

5.3

15.6

5.1 3.0 3.80.3

-4.3

-25.1

0.65.5

9.6 7.910.4

?

YTD Return Through August Final Four Month Return

What We Do Know: Whiplash Is a RiskUltimately, no one knows how this extraordinary 2021 will cross the finish line. After some September chop, we could coast to

the year-end. Or, a bigger bump, a pothole, even a sinkhole could quite possibly be in the road up ahead.

Here’s what we do know: Historical charts and commentary offer some perspective. But they can go only so far in providing

comfort (or cause for alarm). They’re not a reliable guide to what you should be doing with your money.

If you’re investing in equities for the long term, time in the market and not timing is the best route to get to your

ultimate destination. Darting in and out of the market in the hopes of avoiding market declines has historically resulted in

underperformance and disappointment.

Think of those who panicked and bolted last year—they missed a market that doubled in little more than one year’s time.

Investors simply can’t know what the market is going to do on a given day. Look at the difference that staying invested made

in 2020: an 18.40% return versus a -17.87% loss for those who were out of the market on five key days. Ouch.

S&P 500 Growth of $10,000 1/1/2020-12/31/2020

THE DIFFERENCE BETWEEN STAYING INVESTED AND MISSING OUT IN 2020

Performance data quoted represents past performance, which is no guarantee of future results. The S&P 500 Index is generally considered representative of the U.S. stock market.

-20.00%-15.00%-10.00%

-5.00%0.00%5.00%

10.00%15.00%20.00%25.00%

+18.40%$11,840

$8,213-17.87%

Missed 5 Best DaysFully Invested

What We Do Know: Market Timers Miss Out... Over the long term? Missing just the 20 best days in a 20-year period can reduce investment returns by more than

two-thirds ($42,231 vs. $11,474). That’s a heavy toll to pay.

STAYING INVESTED IS THE BEST LONG-TERM STRATEGY


S&P 500 ANNUALIZED RETURNS AND THE GROWTH OF $10,000 OVER 20 YEARS (2000-2020)

Source: Morningstar. Data ranges from12/31/00 through 12/31/20. Performance data quoted represents past performance, which is no guarantee of future results. The S&P 500 Index is generally considered representative of the U.S. stock market.

FULLY INVESTED

MISSED 5 BEST DAYS

MISSED 10 BEST DAYS

MISSED 15 BEST DAYS

MISSED 20 BEST DAYS

-8%

-6%

-4%

-2%

0%

%2

4%

6%

8%

MISSED 30BEST DAYS

MISSED 40BEST DAYS

MISSED 50BEST DAYS

MISSED 60BEST DAYS

$42,2317.47%

$26,6735.03%

$19,3473.35% $14,620

1.92%$11,4740.69%

$7,400-1.49%

$4,969-3.44%

$3,430-5.21%

$2,441-6.81%

What We Do Know: ...In Non-U.S. Markets, TooThe same is true in non-U.S. developed markets, and in emerging markets.

TIME OUT OF NON-U.S. DEVELOPED MARKETS…MSCI WORLD EX USA RETURNS AND THE GROWTH OF $10,000 OVER 15 YEARS (2006-2020)

Source: Morningstar Direct. Data ranges from 1/1/2006 through 12/31/2020. Performance data quoted represents past performance, which is no guarantee of future results.The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries—excluding the United States.

-10%-8%-6%-4%-2%0%2%4%6% $20,724

4.98%$14,3332.43% $10,708

0.46%

-1.12%$8,445

-2.35%$7,005

-4.50%$5,015

-6.35%$3,740 -8.02%

$2,852-9.59%$2,205

FULLYINVESTED

MISSED 5BEST DAYS

MISSED 10BEST DAYS

MISSED 15BEST DAYS

MISSED 20BEST DAYS

MISSED 30BEST DAYS

MISSED 40BEST DAYS

MISSED 50BEST DAYS

MISSED 60BEST DAYS

AND TIME OUT OF EMERGING MARKETS CAN ALSO HURT INVESTMENT RESULTSMSCI EM INDEX RETURNS AND THE GROWTH OF $10,000 OVER 15 YEARS (2006-2020)

Source: Morningstar Direct. Data ranges from 1/1/2006 through 12/31/20. Performance data quoted represents past performance, which is no guarantee of future results.The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The index is calculated on a total return basis, which includes reinvestment of gross dividends before deduction of withholding taxes.

-12%-10%

-8%-6%-4%-2%0%2%4%6%8% $27,401

6.95%$18,1394.05% $13,810

2.18%$11,0050.64%

-0.66%$9,056

-2.94%$6,388

-5.00%$4,632 -6.88%

$3,433-8.56%$2,612

FULLYINVESTED

MISSED 5BEST DAYS

MISSED 10BEST DAYS

MISSED 15BEST DAYS

MISSED 20BEST DAYS

MISSED 30BEST DAYS

MISSED 40BEST DAYS

MISSED 50BEST DAYS

MISSED 60BEST DAYS

“Should I Even Be in the Stock Market?”When it comes to funding investment objectives, history has shown that there’s no alternative to equities in providing

better potential for capital growth over the long term. Over time, investors have relied on stock market gains to fund

a range of life’s goals.

Fortunately, you have someone on this ride with you who can help. Aware of the cyclical nature of investing—and

of equities’ vulnerability to unforeseen events—your investment professional’s job is to build a portfolio that both

anticipates what happens when markets correct, and is in a position to benefit when they rally.

Like 2020, 2021 is earning its way into the history books. Our hope and expectation is that, with the risk

management skills of the investment professional you’ve hired, you’ll remember this year as bringing you closer to

achieving your investment goals.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be appropriate for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.

The views and opinions expressed are not necessarily those of the broker/dealer; or any affiliates.

Past performance is no guarantee of future results.

The S&P 500 Index is generally considered representative of the U.S. stock market. Indexes are unmanaged, do not entail fees or expenses and are not available for direct investment.

Price/Earnings Ratio is the current stock price over trailing 12-month earnings per share.

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

Calamos Advisors LLC 2020 Calamos Court | Naperville, IL 60563-2787 800.582.6959 | www.calamos.com | [email protected]

© 2021 Calamos Investments LLC. All Rights Reserved. Calamos® and Calamos Investments® are registered trademarks of Calamos Investments LLC.

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what matters most: your timing

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