Client Update
January 2021 - Client Update
Pandemic
Out in the world it seems that we have gotten over two huge hurdles of uncertainty: 1) the US election transition, and 2) Covid-19 drug distribution along with a decline in new cases. We are not in perfect condition, but at least we can understand the situation we are in and we can deal with it.
With the continued vaccine roll-out, current indications point to a gradual recovery for 2021 as countries’ economies are able to reopen and markets continue to stabilize. Although we continue to express the importance of portfolio diversification, with current interest rates at an all-time low, our main focus is on equities. We think areas that are likely to benefit more from the recovery include companies within the consumer discretionary sector, U.S. small cap, and international stocks.
Economy
Our economy is measured as to how much business the entire country does when added up all together. The economy is on a good overall rebound from the bottom in early 2020, but this recovery is unfortunately split as to which individuals have gained or lost.
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Winners- Higher paying, high tech, and work-from-home jobs/companies have expanded nicely.
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Losers- Lower paying, in-person work such as hospitality, restaurant, travel, shops, etc. are pushed down and may take a few years to recover.
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Net- On balance our economy is headed for growth due to low interest rates and pent-up demand for spending and travel, etc.
Investment Markets
Volatility
For the full year 2020, most investments had a very good year; a lesson in hanging in there through nerve-wracking times.
Investment Strategies
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Stocks– continue to be expected to produce higher returns than other asset classes, perhaps a shift away from the excitement of the larger companies to the up-and-coming smaller companies.
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Foreign Stocks– as US stocks have run up so high for the last two years, and the value of the dollar has shifted, foreign stocks may have a brighter outlook than they have for several years.
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Bonds – are expected to perform below average (but stable) due to very low interest rates.
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Energy and Materials– has seen a bit of a recovery recently, which may continue as we emerge from lockdowns (hard to say). This category is a good diversifier.
Peter J Canniff, CFP® professional
Jennifer A Murphy, MST, CFP® professional
