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Baby Steps

Baby Steps

| January 04, 2021
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Have you started making the list yet?  You know, the list of all the things you want to do once the vaccine is distributed, the masks come off and the travel restrictions are lifted. Maybe for you it’s just a simple long hug with a grandchild or a big family dinner at a familiar restaurant. 

Everyone wants to know when we will get the all-clear and flip the switch back to “normal.” But I think we all know it won’t be that simple, particularly when it comes to the economy.

One thing I’ve learned over the last 25 years is that it takes longer to build something than to break it, and the economy is no exception. And, as many of you know, rebuilding is expensive. As a country, we have built significant debt that will create challenges for the recovery as well.

So, what might an economic recovery look like in the new year? Well, before I answer that, let me point out that an economic recovery is not the same as a market recovery. You may have already noticed that the markets grew in 2020 while the economy itself took a beating. Many of the key indexes are at higher levels than they were before the pandemic even started. This apparent disconnect is actually quite normal. The market often leads or lags the economy. It is just more obvious this time. 

Maybe more than any other year I can remember, 2020 had more big winners and simultaneous big losers. Generally, the companies that supported us staying home did very well and the companies who would normally benefit from us going out struggled. It has proven once again that the free market can adjust and adapt to change before we are even aware of what’s happening. 

With all of this in mind, how are we approaching 2021? With caution, hope and hard work. 

Caution – Parts of the market are getting expensive and will need the recovery to continue to support the current values. We will be looking to lean towards areas of the market that can show stability and resiliency. We will likely recommend putting cash to work as more parts of the economy participate.

Hope – It is easy to look around and see division and despair. That is often how it looks when things are rapidly changing. We will choose to look for and support the ideas that are keeping the economy growing.

Hard Work – This one is for us all. Our country and our economy were never advanced by watching and complaining. Commit to doing something difficult this year to make your part of this story better. Choose to get involved and make your neighborhood, or your nation better in 2021.

If you are looking for ways to make this year a better one, let us help. 

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in this material may not develop as predicted. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. All information is believed to be from reliable sources; however, Advisor Resource Council makes no representation as to its completeness or accuracy.

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