January 2021
Market Update

We have turned the page on 2020, a year of superlatives, amongst other less flattering terms!

… The fastest correction in history into Bear Market Territory

… The fastest recovery from that correction

… The greatest amount of federal stimulus ever delivered to the US economy

… The longest running first-time claims for unemployment in history

… The driest year on record for Arizona 

… The deadliest health crisis since the Bubonic Plague of the 14th century

… The most number of hurricanes in a year

… The most number of acres burned by forest fires in a year 

… The greatest voter turnout in history

I am sure we’re missing a few.  Perhaps it is best left for the historians to expand on everything that the world faced in 2020.  The fatigue most of us feel from the events of the past twelve months may be gladly left in the pages of a history book and hopefully not a blueprint for this new year.

Had we been able to look into a crystal ball in January and foresee these events, we would never have projected a positive market return for 2020.  Yet that is exactly how we finished the year in the stock market – with positive results for most markets and sectors!

From an investment style standpoint, value outperformed growth for the first time in 2020 during the fourth quarter. The outperformance by value stocks underscored investor optimism for an economic rebound in 2021, courtesy of multiple COVID-19 vaccines and more economic stimulus. For the full year, however, growth massively outperformed value due to strength in the tech sector.  It was a pivot in the way the economy functioned during the pandemic with the focus on work-from-home, and a trend we will likely see continue well past 2021.

In response to the worst pandemic in 50 years and a country at war with itself over lockdowns, individual freedoms and political results, the Fed and Congress airdropped an unprecedented amount of stimulus on the US economy:  first in March with the CARES Act, again at the end of the year with additional direct payments and now more is anticipated with the results of the Georgia Senate run-off giving President-Elect Biden an arguably easier path to keeping the presses running (more stimulus).  To keep you apprised on all of the latest developments regarding vaccines, government programs and details on stimulus packages, we refer you to the special section of our website COVID-19 Resources. 

We have intoned frequently in our meetings with you all this year, and again in our online Zoominars, that when it comes to market performance, it matters less who controls the political power and far more what stage of the economic cycle we find ourselves in – and how accommodative the fiscal policy is.  Today we are still in a recession, but the hope brought by vaccines and a return to normal, the sheer amount of cash sitting on the sidelines right now, and the potential for additional stimulus should provide plenty of tailwind for 2021.  For more on what we see for this year, we encourage you to join us for our first Zoominar of 2021 on February 4th.  Watch your email for more details!

So yes, markets ended a historic year on a high note, as federal economic support, record-breaking vaccine development, and an incredibly resilient corporate America helped to more than offset the worst global pandemic in more than a century.  But there was damage to the economy and certain of those segments of the US fared far worse than others.  While unemployment numbers collectively hover around 6.7%, the travel and hospitality sectors were particularly hard hit and have an unemployment rate over 20%.  It is estimated that more than 6 million families cannot afford to pay their rent or mortgage and lines continue to be unconscionably long at food banks.  We may return to “normal” once herd immunity and the vaccines have this thing under control, but there will be businesses and families that may never be the same.

As we turn our focus towards 2021, we want to acknowledge the hardship that so many have endured over the past 12 months, be it physical, emotional, or financial, and we sincerely hope that those burdens are eased in 2021 and beyond.

A new year, a clean slate, and a new look!  We did a little early spring clean and would like to announce the launch of our new web site – fresh, streamlined, and hopefully informative.  We welcome your comments!  You may also notice a new face on our web site; Myra Alport joined our firm as a Paraplanner last month and you will likely meet her when we are all clear to get back to in-person meetings.

Welcome 2021.

If you have questions, please contact us.

FINANCIAL PLANNING
COLLEGE AND TAX PLANNING
401(K) ALLOCATION

To download the January 2021 Newsletter: CLICK HERE