Seems you just never know. Yogi Berra is credited with this wisdom: “It’s tough to make predictions, especially about the future.” I’ve quoted him before and I’m not sure it’s an original of his, but you get the point.
Successful investors seem to stay away from the predicting game and develop a process. They formulate a system based on some sound fundamentals and filter out the noise that can cause one to make costly mistakes. I have a handful of sources that excel at that strategy and it seems to serve investors well. As we venture into the New Year, I’ll pass along some of their thoughts.
According to Bob Doll, a seasoned veteran at Nuveen Investments, there are a number of reasons to be positive as we peer into the next several months. Improving economic growth, better corporate earnings, a potentially calmer U.S. political landscape, the continued backing of the economy by the Federal Reserve, and obviously the “light at the end of the tunnel” offered by the COVID-19 vaccine roll out.
Though all of that has a promising sound, many think much of these positive trends have already been priced into the market. That would mean we’ve already experienced the market rally due to the forward-looking nature of the investors whose collective decisions actually created this performance. That translated, means the road ahead might be bumpy but a year from now most “credible experts” look for the stock values to be higher than they are now.
After all the wailing and gnashing of teeth over the Senate election in Georgia it seems the consensus has pivoted to what they cleverly call a Blue Ripple. That is opposed to a Blue Wave which would imply that a Democratic sweep (now controlling a majority in Congress and the Presidency) would be assured to bring an anti-business climate that is unfavorable to your investment strategies. For example, higher taxes, more regulation, and the like. However, as I’ve repeated recently, with each political election surprise the market has rallied upward. Seemingly counterintuitive, the best explanation is that with the slimmest of margins, Democrats will have to compromise to move any previously discussed agenda forward. In fact, Steven Chiavarone (an equity strategist at Federated Hermes) suggests that the incoming administration’s plans for bigger COVID stimulus and more spending on infrastructure and green technologies bodes well for economic growth. That would suggest the Blue Ripple is keenly aware that the losing President received the second most votes ever in a Presidential election. This is a sign that his policies had an appeal to a large segment of the country. Common sense would suggest that many Americans are interested in common ground rather than a Blue Wave reversal. Assuming that is true, the next year or two should be favorable for investors with a sound investment process. Perhaps you might save your wealth building/retaining anxiety for the results of mid-term elections in 2022. For now, barring the ever-present possibility of an unexpected “black swan”, the coast looks very upbeat as we muddle into a “new normal” life pattern.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal.
RFG Advisory and its Investment Advisor Representatives do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting professional for guidance on such matters.
Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER™ Professional with Williams Financial Advisors, LLC. Securities offered by Registered Representatives through Private Client Services, member FINRA/SIPC. Advisory products and services offered by Investment Advisory Representatives through RFG Advisory, a Registered Investment Advisor. RFG Advisory, Williams Financial Advisors, LLC and Private Client Services are unaffiliated entities. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.