Mid-Year 2021 Market Commentary
- Economic growth is strong and the 2020 U.S. recession only lasted 2 months.
- The government’s financial response to COVID exceeds that of World War II.
- Inflation concerns causing challenges to bonds (and stocks).
- Corporate earnings in Q1-20 were higher than expected boosting stock market returns.
- Corporate earnings fell less and are recovering faster than any recession since 1950.
- A stock market correction is possible if history is a guide but not certain.
- Cryptocurrency creating more volatility than value.
- Economy (GDP) is expected to grow at a rate of 3-4%.
- Vaccine distribution will be a key driver to consumer confidence and economic growth.
- Stocks hurt by COVID should perform better as the economy continues to “open.”
- Technology continues to become more critical to businesses and households.
- Non-U.S. stocks expected to broadly outperform U.S. stocks over 5-10 years.
- Bonds should not perform as well as the past two years.
- Low short-term interest rates will continue to “punish” savers in bank accounts and CDs.
4th Quarter 2020 Market Commentary
- Investing in the stock market over time is better than investing in a U.S. President.
- Dividends and earnings are responsible for stock market returns over the long-term.
- A small number of stocks have contributed to the S&P 500 returns in 2020.
- The economy has improved however challenges (and opportunities) exist.
- The Unemployment Rate took 4 ½ years to improve to the current level after the last recession ended in June 2009.
- A vaccine(s) is the catalyst to continued economic expansion and higher stock prices.
2020 Market Update
(Updated June 10, 2020)
- The stock market is looking beyond the economic damage caused by the pandemic.
- Consumer behavior is being tracked to monitor the anticipated economic recovery.
- Timing the stock market has proven difficult. Some sophisticated investors have missed the rebound in stocks.
- Remaining invested and optimizing portfolios has been a prudent strategy.
CARES Act to Become Law
(Updated March 27, 2020)
The following groups will receive some kind of financial relief:
- Small Business Owners
- Families & Individuals
- Newly Unemployed Workers
- Retirement Account Holders
- Student Loan Borrowers
- Large Corporations
2020 Coronavirus Update
(Updated March 13, 2020)
- China’s virus numbers are a great sign assuming their the data is valid.
- Two potential scenarios are playing out – still too early to tell which materializes.
- Your investment time horizon is paramount.
- Portfolio adjustments are being made where appropriate.
- Long-term investors will find opportunities in the short-term turmoil.
2020 Coronavirus Update
- The S&P 500 index dropped over 10% since it peaked on February 18, 2020
- The S&P 500 index was up over 36% from 12/26/18 through 2/18/20.
- Corona virus impact potentially added to stock market valuation concerns.
- Viral outbreaks have historically had only short-term impacts on the stock market.
- The Center for Disease Control and Prevention (“CDC”) estimates that nearly 38,000 people on average died in the U.S. from influenza from 2010-2018.
2020 Market Outlook
- Federal Reserve is expecting no changes to interest rates (up or down).
- Recession seems unlikely except for some unknown “shock.”
- Low unemployment creates a challenge for businesses as they struggle to find skilled labor.
- Stock returns for the next 5 to 10 years are expected to average 4-6% per year.
- Bond returns are expected to return 2-3% per year over the same time period.
- Stock market volatility will likely be elevated due to the 2020 election cycle.
- Since 1928, the S&P 500 has gained +12.9% (total return) during election years when the nation’s sitting president ran for re-election. Since 1928, the S&P 500 has gained just +4.5% during election years when the sitting president is not seeking reelection.
4th Quarter 2019 Market Commentary
- Consumers continue to drive economic growth.
- YTD and one-year market returns look very different.
- We continue to stress importance of using proper risk in your portfolios.
- Geopolitical events cause short term market volatility that historically recovers in a matter of weeks, depending on the severity.
- Economic growth in 2019 is still in line with annualized gains experienced since the economic recovery began in 2009.
3rd Quarter 2019 Market Commentary
- June was an historic month for stocks!
- U.S. economy is slowing but growing.
- Corporate profit growth is expected to contract for the first three quarters of 2019.
- The Federal Reserve is expected to lower interest rates this year.
- Recession risk is widely discussed but likely avoided in the near term.
- This month marks the longest U.S. economic expansion on record.
2nd Quarter 2019 Market Commentary
- The US is currently experiencing the longest economic expansion since World War II.
- As of March 31, 2019, the S&P 500 had its best quarterly performance since 1998. This follows December 2018 that was the worst December for the US stock market since 1931.
- The US economy grew 3 percent in 2018 and is expected to slow but grow in 2019. Expectations for inflation are relatively low despite a strong labor market.
- A US-China trade agreement, Federal Reserve interest rate policy, US corporate earnings, Brexit and global economic growth are some of the primary uncertainties that continue to affect daily market sentiment.
- We have recently reduced or eliminated small cap stocks, natural resources and some international exposure to reduce volatility and ideally provide better downside protection if a meaningful correction occurs in the equity market.