2021 Economic and Stock Market Preview
If you had told me back in March that the market indexes would be setting all time highs by the end of the year, I would have told you to get your head out of the clouds. As I mentioned back in March, the market correction was not due to any economic issues but due to the Covid-19 virus, so when we got a handle on the effects of the virus, the economy was in a place where it could recover more quickly. While it has not fully recovered, it has come a long way, and the Federal Reserve has already revised its expected GDP results upward for 2021 (Link here – Fed Summary of Economic Projections ). Unemployment has fallen below the 12-week moving average and continues to move down sharply (see Chart below), which means more businesses are either reopening or new ones are being started.
With a vaccine rolling out through the 1st quarter of 2021 and another round of stimulus just being signed by President Trump, it’s possible that the country could move back to some sort of normality, depending on your definition of normal. Because of the restrictions and lockdowns we saw across the country in 2020, it is likely there is a lot of pent up demand which could make 2021 a really good year for the stock market. Despite there being a lot of mistrust in the recent elections, our government, and the media, it’s important to keep emotion out of investment decisions and look for the opportunities and take advantage of trends.
As illustrated below, after a 13-year secular bear market that began in 2000 (red box), the markets began a secular bull market in April of 2013 (green arrow, right side). These secular bull markets historically have lasted 10 to 20 years. The last bull market started in 1982 and ended in 2000 when the Internet bubble popped (green arrow, left side).
There will still be cyclical bull and bear markets during this time frame, but the overall trend should still be upwards. So, I remain positive about the investing future despite the turmoil in the news cycle that seems to always want to keep us fearful.
Though I had a few in-person meetings last year, I have mostly tried to keep those to a minimum since the weather has gotten colder and the virus seems to have had a resurgence. My hope is that the vaccine will allow everyone to get back to a normal schedule by the spring. If that’s not the case, or if you would feel more comfortable with a virtual meeting or phone call, please let me know, and I’ll schedule it. As always, I’m available to answer any questions you may have.
On a personal note, my father-in-law tested positive for Covid right after Thanksgiving (which he and my mother-in-law spent alone) and was eventually admitted to BSW Lake Pointe in Rowlett. The Lord took him home on the 23rd of December, so he is no longer hurting or in pain. Please remember my mother-in-law, Liz, my wife, Leslie, and her siblings, Carol and Brian, in your prayers as they deal with Richard’s death. Thank you.
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