The major indexes bounced back in March, but technology continued to underperform. The leaders this month were Utilities, Energy, Consumer Staples, Health Care. For the past 20 years, growth companies, especially technology, have led the charge higher for the stock market. Recently, value stocks have been increasing the fastest, leaving many to wonder if value Investing is making a comeback. Today’s market has many points of interest to consider, and we are making changes to our portfolios to take advantage of the change in leadership. Things are changing, so we have to change.
Things to Consider About the Market Today
There are many factors in today’s market that we believe have the potential to fuel a rebound in the stock market in the next few months:
- A $1.9 Trillion stimulus bill was passed. Stimulus checks have already been sent. We believe that will help jump-start the economy and the stock market as people have discretionary money to spend and invest.
- Many people contribute to IRA’s in April because of tax time. This buying is frequently beneficial to the overall market.
- The vaccines appear to be reducing deaths, which has the potential to re-open the economy as people begin to eat out, go on vacation, and generally spend more.
- Corporate profits are calculated year over year. In the next three months, corporations will begin reporting their earnings for 2021 versus the Covid ravaged 2020 numbers. The improvements should be fantastic, which Wall Street should love.
- Demographics will continue to be a tailwind for the next 15-20 years, the same way the stock market roared up in the 1980s and 1990s. Generation X is firmly in its peak spending years. The Millennial generation (which is larger than the baby boomer generation) is entering its peak spending years. When we study this data over hundreds of years, we find that a country with a significant portion of its population in its peak spending years is perfect for the economy and stock markets. We believe this tailwind will aid the stock market in 2021, and years to come.
What Does the Future of the Market Hold?
Today’s market has numerous factors that we feel have the potential to stimulate a bounceback. Because of the many optimistic points, we hold stock positions in our portfolio. Recent market activity points to the potential for new all-time highs in the stock market.
We Are Here to Help
If you have any questions about your investment portfolio, taxes, retirement planning, our 401(k)-recommendation service, or anything else in general, please give our office a call at (586) 226-2100.
If you’d like to discuss how your portfolio is positioned from a risk standpoint, please reach out to us right away. If you’ve had any changes to your income, job status, 401K options, address, or any other financial changes, please contact us. We’ll continue to monitor your investments daily and do everything in our power to protect and grow your accounts. If you have any feedback or suggestions, our team at Summit Financial would love to hear them.
Sincerely,
Bob, Ken, Jim, and Zach
A Special Note About Stock Rotation
We want to make our clients aware that we offer a higher-risk investment option called the Stock Rotation portfolio. TD Ameritrade does not charge commissions on individual stock transactions, and we aim to take advantage of that potential. Each month, our research analyzes the S&P 500 to find the top 7 stocks heading up and have an excellent technical analysis pattern. In good times, this portfolio aims to be 100% invested in individual stocks. When our research is less optimistic, we will move to a less risky allocation. Overall, for clients that are hungry for the potential of more significant gains, even if it’s a small allocation of your overall portfolio, this portfolio may be a good fit. If you’d like more information, please contact our office.
Notes & Disclaimer: Stock market indices, like the S&P 500 Index, are unmanaged groups of securities considered to be representative of the stock market in general or subsets of the market, and their performance is not reflective of the performance of any specific investment. Investments cannot be made directly into an index. Historical returns data are calculated using data provided by sources deemed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, or correctness. This information is provided “AS IS” without any warranty of any kind. All historical returns data should be considered hypothetical. Past performance is no guarantee of future results.
This communication is only intended for recipients who reside in states where our agents are licensed to sell these products. Investment advisory services are offered through Summit Financial Consulting, LLC, an SEC registered investment advisor. Registration does not imply a certain level of skill or training. Summit Financial Consulting Investment Advisor Representatives do not render tax, legal, or accounting advice. Insurance products and services are offered through Summit Financial Consulting, LLC. Note: Please update Summit Financial Consulting, LLC, if your investment objectives have changed or if the personal or financial information previously provided has changed. The investment advisory disclosure document that describes Summit Financial Consulting investment advisory services account is provided to you annually. Please consult Summit Financial Consulting for a copy of this document should you need an additional copy. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance cannot predict future performance. It is not possible to invest directly in an index. The Sherman Group, LLC is not associated with Summit Financial Consulting, LLC in any way, other than a research sharing partnership. Back testing is more heavily scrutinized than any other type of investment analysis because it can be updated to take advantage of past data. The algorithms and trading signals that we receive from the Sherman Group, LLC were created using back testing with the goal of creating a sustainable research process. We have reviewed data from the entire 20 year period which was mostly back tested, and have also personally reviewed the live data for the past 5 years and feel comfortable with it, but we encourage you to meet with us and ask questions so you are fully informed on what we plan to do with your investment assets at TD Ameritrade. It is important to look at fees, taxable repercussions, and trading frequency when looking at a rate of return number. There is no perfect system or research feed, and Sherman Group, LLC has had both longer term and short-term periods where they lost money. Investing involves risk, and these portfolios are no exception.