Year-End Update

As we get ready to cap off a crazy year, we thought it would be right to provide an update on developments in financial markets and the broader economic news we are following. In the last eight months, we have gone from chatter of a double-dip recession to all-time highs in the stock market. A few of the big issues have been vaccine development, the election, stimulus packages, a wave of IPOs, and historically low yields in the fixed-income market. Many of these topics have moved markets on a daily basis and will likely continue to do so. It is important for investors to be informed of the economic developments that affect their portfolio and impact our financial planning strategy. In a year that oftentimes felt catastrophic, the swift recovery in markets seems out of touch with the reality that many people are experiencing. Investors can benefit from the fact that markets are forward looking, but our current optimism is contingent on successful vaccine rollout and continued relief for the hardest-hit segments of the economy.

The introduction of so many new variables and the continued uncertainty around the resolution of the COVID-19 pandemic has undoubtedly resulted in sustained volatility. Some industries such as healthcare, semiconductors, gaming, and software have taken off while traditional banking and energy have lagged behind. We are cautious of chasing some of the trendy names and acknowledge the possibility of a retail-infused bubble in some niche corners of the market, yet we remain steadfastly confident that the broader market is not overvalued. The recovery of major indexes has been carried by the outperformance of a few big companies, while a significant portion of stocks have had more moderate recoveries.

For markets to sustain their recent success, there must be continued support for small business owners and people who work in hospitality that are barely staying afloat. Congress just recently passed a $900 billion emergency relief package with major items including stimulus checks, an extension of unemployment insurance, and loans for struggling businesses**. The next biggest expenditures were funding for vaccine distribution and schools. Other important items included rental assistance, and funding for the airline and entertainment industries. We expect a much broader package, with support in many of the same areas, after President-elect Biden is inaugurated. Along with being compassionate and supportive, many of these policies can help the market. Landlord and tenant protections are especially helpful for REITs and we believe it can also benefit the whole financial sector. Direct payments to consumers might have a specific impact on the consumer staples sector, but ultimately might buoy the whole market.

Vaccine news is a hot topic that is likely to be front of mind for most people, investors or not. The major factors that we are tracking are the efficiency of rollout, any manufacturing mishaps, and what portion of the country is willing to take it. Getting it out quickly and to as many people as possible is obviously what the market wants, but investors are not necessarily pricing in a flawless and rapid rollout.

Looking ahead, the next year’s market moving news is likely to center around the Biden administration’s policies and the global trend towards sustainability. We expect the next administration to make significant investments in infrastructure and clean energy. Beyond the public sector, we believe green technology is expected to be a focal point of innovation and new investment. There has been an ongoing trend in sustainable investing, and we will continue to look for opportunity in this area.

Keeping in mind the shakeup that has happened in markets this year, it is evident that opportunity abounds in different areas. We may already be seeing a little more confidence in the financial sector. With hopes of businesses re-opening, the expectations of economic expansion and subsequent higher interest rates tends to bode well for the banking industry. In the near term, we are looking for progress on vaccine distribution and another COVID-19 relief package to continue to stabilize markets and strengthen the consumer. With the likelihood of a divided congress high, the reputations of both parties will be on the line when it comes to relief bills and a stable economy. We are optimistic about the prospects of the global economy for the coming year and look forward to providing updates that further elaborate on strategic shifts. As always, we remain confident and at ease with our long-term planning and hope that you feel the same. Wishing everyone a happy holiday season and a healthy new year.

Written by Cameron Stricker and Alan Stricker

Securities are offered through Mid Atlantic Capital Corporation (MACC), a registered Broker Dealer, Member FINRA/SIPC. Financial Advice is offered through Mid Atlantic Financial Management, Inc, (MAFM) a Registered Investment Adviser, August Financial Consulting, LLC is not a registered entity or a subsidiary or control affiliate of MACC or MAFM

The information expressed herein are those of Cameron Stricker and Alan Stricker. It does not necessarily reflect the views of MACC or MAFM. Neither August Financial Consulting, LLC, MACC nor MAFM gives tax or legal advice. All opinions are subject to change without notice. Neither the information provided, nor any opinion expressed constitutes a solicitation or recommendation for the purchase or sale of any security. Investing involves risk, including possible loss of principal.

Historical data shown represents past performance and does not guarantee comparable future results. The information and statistical data contained herein were obtained from sources believed to be reliable but in no way are guaranteed by August Financial Consulting, LLC, MACC or MAFM as to accuracy or completeness. The information provided is not intended to be a complete analysis of every material fact respecting any strategy. The examples presented do not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy. Diversification does not ensure a profit or guarantee against loss. Carefully consider the investment objectives, risks, charges and expenses of the trades referenced in this material before investing.

Sources
**Source – https://www.nbcnews.com/politics/congress/congress-reaches-deal-900-billion-covid-19-relief-n125177