Quarterly Market Update – January 2021

Thank you to the 100+ individuals who registered and participated in our recent webinar on the current market climate and forecast on what to expect in the next quarter. The stock market suffered a serious setback in March 2020, which caused many to cash-out. But the recovery was quicker and smoother than many predicted and new highs were reached during the fourth quarter. With the exception of REITS, U.S. stocks performed reasonably well. The pain of 2020 is not yet over, but the action of governments and central banks throughout the world make the low lows of the 2020 spring seem unlikely. So, where are we as we pick up steam for 2021?

A heavy debt load

There are several issues to consider with increasing debt, especially if it rises in relation to the GDP. There’s always the possibility of inflation, and the government may be hamstrung in its attempts to provide further economic stimulation.

The Fed

While it has not always been the case, the Federal Reserve acted quickly and decisively this time. Rates were dropped immediately, and it is unlikely they will be going anywhere anytime soon, which, of course, means CD rates and money markets will remain low.

Politics

Although there is some trepidation over one party having the trifecta in D.C., the historical reality is the market really doesn’t care who’s in office. And as a practical matter, a 50-50 Senate will not be a rubber stamp for massive legislative changes when 60 votes are required for most matters.

Consumers

Despite the sever hardships on many individuals, the overall well-being of many consumers is good:

  • Debt services are low
  • Interest rates on mortgages are very low
  • Savings are up

There is a large amount of money sitting on the sidelines waiting for the right investment.

The flip side

However, for many others, the suffering is real, and time is running out. Many businesses will never return, and many industries will never be the same.

Looking to the recovery

From the following chart, certain industries should take the forefront as the economy opens up.

Not every year is like 2020, but every year has its challenges for investors. You’ll always be in the game if you remember and stick with the ABCs of investing:

  • Asset allocation – achieving the proper balance for your investments
  • Behavior – knowing when to buy, when to sell, your timelines and your risk tolerance
  • Cost – what are your investments really costing you

Check out our full 4th-Quarter Market Update webinar below

With these details in mind, contact us today for a review of your investment plan to see if you’re on track for the new year.

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