Broker Check


January 15, 2021


 The big picture for 2021, at least from an economic sense, looks positive. Of course, there are always market headwinds and there is always the opportunity for a surprise when forecasting. But the word is that we will remain in a low interest rate environment for 2021 and quite possibly well beyond. And the International Monetary Fund is anticipating global GDP to be above 5% for the calendar year. That’s very good news for a lot of reasons, and of course, there is the rolling out of a vaccine. Good or bad, like it or not, its distribution will bring with it some confidence to return some aspects of our lives and our commerce to a more normal state.

The story with stocks….

I remember how “tech stocks” ruled the 90’s. Well, tech is the theme in today’s stock markets as well but in a very different way. Companies that have adopted and are leveraging technology, not necessarily “tech companies,” have been market leaders in their respective industries. The willingness to adopt new applications has increasing efficiencies and market share in many sectors and as a result these companies have seen and should continue to see improved growth. Healthcare and retail would be some prime examples of how technology is changing the way companies in those sectors operate. The “tech story” extends well beyond the United States. With many strong growth companies in both Europe and Asia implementing new technology to gain competitive advantages in their markets. Owning growth and value, domestic and international stocks can still provide the growth and diversity someone should be looking for in a long-term investment strategy.

Is there a story for bonds?

Absolutely. Everyone that’s looked at their bank account yields know that interest rates are low. The tag line, “Lower for longer,” remains in vogue. Which has left may investor reaching or “reaching” for yield. Often times this “reach” results in a portfolio taking on more risk than originally planned. And individual investors aren’t the only guilty parties. This is when understanding what is actually inside that mutual fund or ETF could prove to be important. Remember there is a reason that yields are higher on some investments, and it often means that the underlying instrument (fund, stock, bond) may not be as stable or strong as its peers. Rates probably are not going to change much in the coming year(s). So, you want to be careful about what you own and understand why. Bonds can and should play an important part of a well-diversified portfolio, muting some of the natural volatile that comes with today more correlated equity markets.

And for Cash….

To be continued.

The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change with or without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards.

The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value.

Before investing in ETFs and mutual funds, investors should carefully consider a fund’s investment objectives, risks, charges and expenses.  Fund prospectuses contain this and other information and may be obtained by asking your financial advisor.  Read prospectuses carefully before investing.