Welcome to the new look of our newsletter! New doesn’t always mean better, but in this case, I think the look is much more complimentary.
We are seeing markets holding up well on the outlook for more stimulus.2 We are also seeing our new FED chair, Janet Yellen, take a supportive stance on the stimulus and its impact on our recovery.1 At present, we are seeing more tailwinds than headwinds for 2021, but we’re not losing sight of the possibility of a correction in the NASDAQ and S&P 500, which would certainly be in line and possibly overdue.
We are still of the opinion that the 2nd half of the year should show some robust numbers in the way of economic recovery and gain.3 This makes sense in that we will be seeing the falling off of the 1-year numbers looking back. This might spark some renewed debate around inflation, whether stocks are over-valued, and if we’re due for a rate hike(s).
I met with Tyler this past week in Naples to discuss portfolios, strategy and opinions on where we are and where we are going. We are still seeing more up days than down days for 2021. NASDAQ correction and an S&P 500 correction were discussed alongside the stimulus package, risk in our portfolios and inflation. The "what if" scenarios were fun conversationally, but we kept coming back to taking profits in some of our big return positions and when it is appropriate to do that. All these items I will be likely sharing in future newsletters, but for now, we are in preparation mode.
Portfolio rebalances are completed for now.
We are happy to report that 2021 has performed as expected and unlike 2020, has been relatively uneventful so far…
Till we speak again, stay warm!
Stocks notched strong gains last week, paced by a string of solid economic reports and consensus-beating corporate earnings.
The Dow Jones Industrial Average gained 3.89%, while the Standard & Poor’s 500 advanced 4.65%. The Nasdaq Composite index jumped 6.01% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, climbed 1.96%.1,2,3
Bull Story Remains Intact
As the social media trading frenzy fizzled, investors were able to focus on more fundamental issues, like economic data and a fresh batch of corporate earnings. Pleased by an economy that appeared to be growing stronger, coronavirus cases in decline, and an improving vaccine rollout, investors bought stocks with enthusiasm.
The rally last week was broadly based, with the Energy, Financial, Communication Services, and Technology sectors posting gains.
The stock market’s optimism on an improving economy was seconded by the bond market as the 30-year Treasury rate rose to nearly 2.0% by Friday. When yields rise, bond prices fall. Falling bond prices may indicate that investors are less interested in Treasuries and more interested in other investments that benefit from a stronger economy. Rising yields may also reflect worries that a growing economy may spark inflation that may lead the Fed to rethink its zero-rate policy.4
The Inevitable Denouement
It was just two weeks ago that a social media chat forum appeared to contribute to a buying frenzy in a handful of struggling companies, unsettling Wall Street and capturing the nation’s attention.
This Week: Key Economic Data
Tuesday: JOLTS (Job Openings and Labor Turnover Survey) report.
This Week: Companies Reporting Earnings
Monday: Simon Property Group (SPG).
“Love recognizes no barriers.”
– Maya Angelou
Be On Alert for IRS Scams
This tax season, the IRS expects an uptick in tax-related scams. In most cases, IRS “phishing” scams are bogus phone calls and emails that claim to come from the IRS.
Remember, the IRS will never:
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
Loving Yourself First
February is a month that many associate with love. Romance, in particular. The rise of self-care over the past decade has brought attention to the concept of loving oneself – the basic philosophy behind it being that if we love and take care of ourselves, with intention, the happier and healthier we’ll be, and all the people in our lives will benefit, including our romantic partners.
Loving ourselves isn’t always easy. And it doesn’t mean always being overly indulgent, but rather making choices that help support our overall well-being. For some people, that may look like taking time to relax if they have a lot of stress in their lives. For others, it can be making a to-do list to organize and accomplish tasks if they tend toward procrastination. Being more self-aware and cheering ourselves on more if we’re often overly harsh or being more introspective and searching for ways to improve if we are myopic to our own shortcomings. All these things and many more not mentioned are intentional actions we can take to be our best selves.
This February, take some time to reflect on the ones you love. Just make sure you don’t forget about the one you should love the most.
Tip adapted from PsychCentral.com7
Six cups are lined up in a row. Cups 1-3 on the left are full of juice; cups 4-6 on the right are empty. How can you arrange this row so empty and full glasses alternate while moving only one cup in the process?
Last week’s riddle: It can certainly be measured, yet it has no length, width, or height. What is it? Answer: The temperature.
Sea Lions at sunset, San Diego, California.
Footnotes and Sources
2. The Wall Street Journal, February 5, 2021
3. The Wall Street Journal, February 5, 2021
4. The Wall Street Journal, February 5, 2021
5. CNBC, February 4, 2021
6. IRS.gov, October 7, 2020
7. PsychCentral.com, July 8, 2018
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The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
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