Post-Thanksgiving Outlook

Greetings Clients:

I hope everyone had an enjoyable Thanksgiving.

I took advantage of the quiet time not spent traveling or moving chairs to catch up on some reading, mostly about the markets and the economic outlook now that we have the presidential election behind us.

Several commentators (including JPMorgan & BlackRock) expect a near-term pull-back in the markets, followed by a strong recovery in 2021. We think this makes sense. We are looking at a pretty severe fiscal cliff at the end of this month with the expiration of the Cares Act benefits. We think beneficiaries and investors alike are failing to look ahead and plan for the sudden drop in individual income and its collective impact on our GDP. We believe that investors have priced in more fiscal stimulus, but this will be forgotten when the benefits run dry. The markets will pull back, only to recover in short order with the next positive vaccination trial result, and possibly more stimulus from Congress.

In two to three years these wild swings will be a distant memory, but we want you all to be ready for some excitement. In order to be ready, you know what I am going to say next:

Please keep us updated on your short-term cash needs.

We are feeling increasingly enthusiastic as several sectors (small, mid, international, quality, low-risk contrarian) have outperformed large US growth over the last month and/or three months.  Who knows if the trend will persist in the short-run, but it doesn't have to; over the long-term your portfolio will do handsomely for you.

As our firm assets have grown, we have gained access to a couple of big fund managers (John Hancock and State Street) which are giving us time with their strategists. We have also stepped up our use of new financial technology to analyze our portfolios. And we continue our periodic reviews of the investment funds. All of this research has only solidified our conviction in our approach.  We cannot eliminate volatility if we strive for something greater than a risk-free return. But we can reduce volatility and tilt the odds in our favor.

Now is the time for final year-end planning. Please let us know if you would like to make any retirement plan contributions or charitable gifts. Required minimum distributions from IRAs have been waived by the Cares Act; please contact us if you are considering an optional distribution.

 Be well and stay safe. As always, our money is invested right alongside yours.

Sincerely,

John H. Biebel, J.D., CFP®