Market Review

Published April 2021

Stocks:  

Reopening Reopening Reopening! The past few quarters, we have been positioning portfolios to participate in the reopening of the economy. We believed that banks, insurance companies, energy, industrials, hotels, airlines, and other stocks that were sensitive to the improvement in the overall economy would benefit. They have responded well. Many growth and technology stocks peaked last fall and have yet to get back to those highs. Small stocks, high dividend stocks, and “value” stocks have outperformed in a major way the past two quarters. Airlines are up 32.4% this year, oil and gas stocks are up 36.9%, and banks are up 26%. The reopening trade has done well and we believe it will continue for several more months.  We will remain invested there.

Interest rates:

Interest rates have begun to increase quickly. The 10-year treasury has gone from paying 0.50% near the bottom last year to now over 1.7%. With increasing rates, comes concern for long-dated bonds. We don’t own many of these, but if you own bonds in your 401k, we may need to chat about these. So far in 2021, the iShares 20+ year treasury ETF is down nearly 13%. If interest rates continue to go up, bonds will get hit even further.

Inflation:

With an uptick in interest rates, and continued government spending at record levels, the concern for future inflation should be real. During the summer and fall, we should begin to see how prices compare year over year to a more non-lockdown environment. We are concerned about future inflation and the effect on retirement spending of our clients. The best way to hold off inflation is to try to participate in stocks that go up during inflationary times. Those sectors are typically financials, materials, industrials, small cap value, and commodities.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.

Information contained herein does not involve the rendering of personalized investment advice but is limited to the dissemination of general information. A professional adviser should be consulted before implementing any of the strategies or options presented.

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the adviser), or product made reference to directly or indirectly on this website, or indirectly via hyperlink to any unaffiliated third-party website, will be profitable or equal to past performance levels. Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the occurrence of which would have the effect of decreasing historical performance results. There are no assurances that a client’s portfolio will match or outperform any specific benchmark. All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. Changes in investment strategies, contributions or withdrawals may materially alter the performance, strategy, and results of your portfolio.