Market Update
Stocks added to their amazing run over the first half of 2021, with the economic recovery continuing and consumer confidence soaring back to pre-pandemic levels. Gross Domestic Product (GDP) has rebounded from the lockdown lows, job growth has been strong, and corporate earnings have been exceeding expectations. Given all that, the S&P 500 Index has risen over 15% year-to-date through June, reflecting a high level of market optimism and a reasonably healthy economy.
Yet, as always, we face a number of uncertainties as well. Consumer prices have spiked, rising at the fastest pace in 13 years. It’s likely a short-term phenomenon, but might we actually see higher inflation stick around for a while? The Federal Reserve has been “greasing the gears” of the economy for 15 months, but what happens when that Fed support is removed? Will the economy thrive on its own? Is the raging stock market pricing in too much good news? Oh, and let’s not forget COVID… it’s still out there, with more contagious variants popping up and cases spiking in a number of locations. That’s just a small sample of potential “investor concerns” showing up in the media lately.
Whether stocks are soaring or falling, there is never a shortage of “what if” stories to give us pause. But the reality is, it adds up to a lot of noise. We just don’t get to know the course of history ahead of time, and most speculation on the future ends up being flat out wrong. What we can be reasonably confident in is the long-term growth of the world economy and stock markets, along with a lot of overreaction by those markets in the short-run. That’s just the way it has always worked. Growth is rewarded – eventually. We simply have to appreciate when markets are being generous, and accept that they won’t always be that way. The oft-maligned “non-stock” portfolio holdings are there to steady the boat when the waters get too choppy.
We know we sound like a broken record – your assets are invested in a percentage of safer and riskier holdings based on your ability to take risk financially and psychologically. These allocations should only be changed when your situation changes. Changing allocations based on how you think the market is going to do is a loser’s game. We help you stay the course no matter what the world throws your way.
