Cary’s Market Commentary – March 2021
From an investment standpoint, 2020 can be considered nothing short of remarkable. The markets started the year feeling tailwinds from a strong economy and almost full employment. Of course, the reaction to the pandemic we saw in March resulted in a violent pullback that left us feeling uncertain and unsettled.
The idea that we would put those losses in the rear-view mirror and soon watch the markets move on to make new highs was not even on the radar screen. In my October message, I sent a video explaining that I believed the election outcome would make little difference to the health of the investment markets. I took some shots at that time for my prediction and while we have not seen any major policy legislation that may be forthcoming, the markets have continued to make new highs with a new administration.
The Rhinoceros in the room is pretty clear….how long can we have reasonable economic growth, extremely low interest rates, massive fiscal stimulus and a stock market that delivers outsized returns?
My answer is honest and sincere…..I have no clue and I’m always amazed at how markets over-react on both the upside and the downside. So, hold onto your seats and enjoy what promises to be an interesting ride. If you have made substantial profits and it makes sense from a risk perspective, we will trim back your gains a tidbit and plow those funds into another asset class that rebalances your portfolio.
I have heard the argument that when we reach the point where substantial numbers of people have been vaccinated and the economy can reopen, we should see a surge of spending and economic growth. I can understand where the travel, leisure and hospitality sectors will benefit. In some sectors, consumer confidence has been unexpectedly strong, especially as I watch all of the home renovation projects going on in our neighborhood!
The best action to take is to check your portfolio risk level, decide you can weather the next storm, and stay out of harm’s way until we can reach a herd immunity level and resume some semblance of normalcy in our lives.