April 2021 Financial Markets Summary
March marked the one year anniversary of the COVID-19 driven market bottom. According to the CDC, over 30 million Americans have tested positive and unfortunately, over 500,000 lives have been lost in the United States. The pharmaceutical industry stepped up by rapidly developing several FDA approved vaccines. Approximately 30% of the U.S. population has received at least one vaccine dose.
Practically all of the asset classes have already recovered their losses from 2020’s steep declines. Interest rates and inflation have started to pick up. The unemployment rate has dropped down to around 6% and oil has jumped back up to around $60 per barrel. So where do we go from here?
According to JPMorgan CEO, Jamie Dimon, “strong consumer savings, expanded vaccine distribution and the Biden administration’s proposed infrastructure plan could lead to an economic Goldilocks moment – fast, sustained, growth alongside inflation and interest rates the drift slowly upward.” However, just 12 months ago, he predicted a bad recession with GDP falling by up to 35%.
On the other hand, GMO’s Jeremy Grantham recently wrote that “the long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior.” But, Grantham as one of the most popular perma-bears, has been calling for a significant pullback for years.
We see many wide ranging views just like these regarding future expectations in these unique times. We feel that now is as important as ever to stick to time tested building blocks of portfolios: diversification, periodic rebalancing and tax loss harvesting.
We will continue to experience volatility as markets grapple with the spread of COVID, the vaccine distribution and the new administration. We encourage investors to maintain a long-term perspective and not get caught up in the moment and make an emotional decision with their portfolios based on these “expert” opinions. We remind clients to maintain a diversified allocation and to keep their next 7-10 years of income needs from their portfolio in stable assets such as cash, CDs and short-term bonds.
| Asset Index Category |
Category |
Category |
5-Year |
10-Year |
|
3-Months |
1-Year |
Average |
Average |
|
| S&P 500 Index – Large Companies |
5.8% |
53.7% |
14.0% |
11.8% |
| S&P 400 Index – Mid-Size Companies |
13.1% |
80.8% |
12.5% |
10.3% |
| Russell 2000 Index – Small Companies |
12.4% |
92.6% |
14.8% |
10.1% |
| MSCI ACWI – Global (U.S. & Intl. Stocks) |
5.2% |
57.9% |
13.3% |
9.3% |
| MSCI EAFE Index – Developed Intl. |
3.5% |
44.6% |
8.9% |
5.6% |
| MSCI EM Index – Emerging Markets |
2.3% |
58.4% |
12.1% |
3.5% |
| Short-Term Corporate Bonds |
-0.1% |
6.2% |
2.6% |
2.1% |
| Multi-Sector Bonds |
-3.3% |
0.7% |
3.1% |
3.5% |
| International Government Bonds |
-6.7% |
1.3% |
1.2% |
0.6% |
| Bloomberg Commodity Index |
6.9% |
35.0% |
2.3% |
-6.3% |
| Dow Jones U.S. Real Estate |
7.7% |
34.9% |
7.2% |
9.1% |
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only. Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy. It is provided with the understanding that no fiduciary relationship exists because of this report. Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice. PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice. If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives. All rights reserved.