Monthly Market Update:
Recap of December 2020
Welcome to the first market update of 2021. I hope you all enjoyed the holiday’s and this update finds you happy and healthy.
If this is your first time tuning in, I’m Eric Powell, the founder of RightPlan Financial and The Future Mill. I think it’s safe to say most of us want to put 2020 behind us, but first let’s recap the December market returns, what we saw over the past year and then discuss what is to come for 2021 with client portfolios. At the end of the update, I will be sharing some exciting news about some tech that we will be making accessible for clients in early 2021.
To start off, let’s look at the numbers. For December, the S&P 500 was +3.84%, the Dow Jones Industrial Average +3.41%, Nasdaq +5.71%, MSCI EAFE +4.65%, MSCI Emerging Markets +7.35%, Barclays US Aggregate Bond +0.14%, Barclays US Corporate High Yield +1.88% and Barclays Municipal +0.61%.
December was positive for the markets for various reasons including the beginning of the vaccine distribution and the looming stimulus package that was passed in late December. To reflect briefly on the 2020 market, let’s look back to mid-February. It was then that Covid fears began rattling the stock market that was near all-time highs. In 23 market days, the overall market fell almost 34%. From the rough ride down, the markets rebounded rapidly and continuously set record highs for many major US indices throughout the remainder of the year.
The 2020 market didn’t make a lot of sense to most people and the GDP numbers prove that not making sense is a sensible thought. GDP, or Gross Domestic Product, is one of the key factors for measuring the strength of the US economy. At this time, GDP numbers still remain below pre-Covid numbers, though the market is higher than pre-Covid. Key factors in the GDP and market discrepancy are from the Federal Reserve and Congress. Interest rates were cut, a strategy known as Quantitative Easing was put into place, government loans such as the PPP were offered and two separate stimulus packages were passed. To say a lot happened in one short year is an understatement.
For 2021, predictions from financial analysts are being tossed around like dice on a Craps table. Guessing which, if any analyst will be right, is about like rolling the dice yourself. That said, 2020 solidified our investment strategy and the silly saying that you hear far too often from me still rings true and that is “Stay The Course”. To stay the course, make sure your investment portfolio is aligned with your risk tolerance.
2021 is a new year, though it will not come without challenges. As those challenges arise, we will be right here for you. Our portfolios were rebalanced prior to the election and we will be monitoring any changes that may need to take place in the first quarter of the year. If you have any questions, please reach out.
To wrap up this update if you decided to make it through the market chatter, I am excited to share we will be launching a new dashboard for clients in the coming months. This dashboard will allow you to monitor your investment accounts managed by us and also allow you to link outside accounts. You will have some tools to play with as well, such as your own retirement planner if you feel up to the challenge. This planner will not replace our comprehensive financial plans, though it will allow you to have a quick view of where you are on your financial path. Regardless of whether tech is your thing or not, this dashboard will provide you with one login to see your accounts, performance, messages from us, and much more.
I appreciate you watching and wish you a happy and healthy 2021.