Profit Taking

January 29, 2021

January is traditionally one of the best months of the year for the market. 401K plans are an important source of new money for the market and, regardless of your income level, if you are participating in a 401K plan you are adding money to the market in January. Money managers do not necessarily need to put all that new money to work in January, but they will at least put some of it to work. Coming off a surprisingly good year for the market the month began with the worst day in 2 months over nervousness about the Senatorial elections in Georgia. The election results did not go as most had expected, but the market moved higher the day after the election and pushed higher for most of the month. The S&P 500 hit multiple new all-time highs during the month but ended with a loss of 1.1%. Interest rates hit the highest level in 10 months before backing off at months end.

The Georgia elections were the focus during the first week of the year and the S&P 500 hit a new all-time high the day after the election, despite Democrats taking control of the Senate, and despite the events at the capitol in Washington. Early Thursday morning Biden’s election was confirmed by Congress and on Friday we learned 140,000 jobs were lost in December. Despite the chaotic week the S&P 500 closed with a gain of 1.8%. The second week of the month saw movement towards a second impeachment of Trump and a rollout of a left leaning stimulus package from President Elect Biden. The market struggled with the news back drop, declining 4 of the 5 days and ending the week with a loss of 1.5%. The Martin Luther King Jr. holiday shorten the following week, which featured the inauguration. It was rally back on during the week as investors focused on accelerating vaccine distribution and more government money that may be coming from Washington. The S&P 500 ended the week with a gain of 1.9% and the tech heavy NASDAQ jumped 4.2% for the week. During the last week of the month, we learned housing prices in November were up 9.5% over last year with Phoenix leading the charge. It was the best month in 6 years for house prices and one of the best in history. It was also the busiest week for earnings reports this quarter and they have, for the most part, been better than expected. Concerns about excessive speculation sent the S&P 500 down 2.5% on Wednesday, erasing all of the gains for the month, and disappointing results from Johnson and Johnson’s one-shot vaccine helped the S&P 500 put in its worst week since Thanksgiving.

Over the past 90 years the average gain/loss for February has been 0. It is the only month without an average gain or loss and closes up as often as down. We believe the Federal Reserve keeping interest rates low, Congress promising to send more money and the accelerating pace of vaccinations will put a safety net under the market. By any standard, valuations are high, and a 5% to 10% pullback can come at any time. We were buyers during the 2.5% market decline on the 27th and will be buyers on any further tradeable declines. We believe the economy will gain momentum as the year goes on and that momentum should accelerate on signs the pandemic is abating. Watch the rate on the 10-year Treasury, in our opinion a spike in the costs of money is the biggest short term risk.

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 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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