2021 Message from Dave Sherwood

January 5, 2021

I think we can all agree 2020 will go down in history as one of the strangest years in modern times.  During the March meltdown none of us could have anticipated that the year would end with a double-digit gain for the S&P 500 that included multiple new all-time highs.  December is historically one of the better months for stocks, but after gaining over 65% from the March low we wondered if Santa would be able to bring us gifts this year or if we would be looking at coal.  The majority of the gain for the month was realized in the first 4 days of trading as it became clear at least one vaccine was going to be available by the end of the year.  Hope that the vaccine will be the beginning of the end of the nightmare drove the S&P 500 to a 3.7% gain for the month and it finished the year 16.3% higher.  Oil gained another 6.5% in December and is now 40% above the November low.  The rate on the 10-year Treasury Note got to within a fraction of 1%, a level not seen since March. 

 

The month began with a strong rally as approval of the Pfizer COVID vaccine appeared to be imminent and the rally continued after England became the first country to approve use of the vaccine.  At the end of the week, we learned only about 55% of the jobs we expected were created in November, but the S&P 500 rallied 2.2% to a new all-time high.  The first full week of the month featured some profit taking as the long expected economic stimulus from Washington failed to materialize and appeared to be at a standstill.  As expected, Thanksgiving created a large number of new positive COVID tests, but people in England began getting the Pfizer vaccine.  At the end of the week the S&P 500 had lost 1%.  Late Friday night the FDA did give approval to the Pfizer vaccine and Senate majority leader McConnell said they would not adjourn for the holidays until a stimulus deal was passed.  At the end of the second full week Tesla became one of the largest companies ever added to the S&P 500 and while that created some volatile trading the week ended with a gain of 1.3%.  The third full week of the month included the Christmas holiday and ended with a half day of trading on Thursday and a closed market on Friday.  Volume was light and despite passage of the long awaited COVID relief bill the S&P 500 ended the week with a fractional loss.  The final week of the year was the week between Christmas and New Year.  The week has historically been a good one for stocks and that continued this year.  Trump did sign the stimulus bill which sent the market higher on Monday and the holiday shortened week ended with a gain for the S&P 500 of 1.4%. 

 

January is traditionally one of the best months of the year for stocks.  The month closes with a gain 65% of the time and the average gain has been 1.2%.  Everyone who has a 401k is putting money into the market in January, so it is traditionally the month with the highest inflow into equity mutual funds.  There is no debate that stocks are richly priced, but many believe the tsunami of stimulus money will combine with the vaccines to make 2021 a strong year for the economy.  During the first quarter we are likely to see a continued surge in COVID cases as we come off the Christmas/New Year gatherings, but that may peak in January and as the vaccines become more widely available, we should start to see a decline in cases.  From an economic point of view the first quarter is expected to be the worst with a slow but steady recovery that builds steam as the year goes on.  The biggest risks would be government shutdowns or something that creates concerns about the vaccines.  We would be a buyer on a tradeable pullback.  

 

If you know someone who would be interested in learning more about Greenberg Financial Group, or who is retired or thinking about retiring, or would simply like us to review their current portfolio, please contact us at 520-544-4909, or visit our NEW website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.   

 

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