Monthly Outlook: December 2020 Stock market indexes are making new highs and many stocks are higher today than they were pre-COVID. Why? Because, you know, everything is awesome! Except that they’re not. Stock markets could hardly be more disconnected from reality and seem to be pricing in a very optimistic and return-to-normal future. We’ve had 270,000 COVID deaths in the U.S. this year and the virus is still unchecked as of today. Twenty million people lost their jobs initially this spring and although 10 million people are back to work, that leaves 10 million people still unemployed, which is still a recession-level 7% unemployment rate. Here in Colorado, like most states, we’re in “Code Red” with restaurants open at 25% capacity and other businesses, especially leisure and hospitality, are struggling to stay afloat. According to Standard & Poor’s, the S&P500 earnings in 2019 (pre-COVID) were $139/share or 23x price to [...]

Monthly Outlook: November 2020  At long last, we’re finally in election week. This year has been a stressful one for almost everyone, full of anxiety, uncertainty, waiting, and fighting. It’s just one thing versus another: Trump vs. Biden, Red vs. Blue, Rich vs. Poor, Covid Fighters vs. Covid Deniers, Urban vs. Rural, White vs. Non-white, Restaurants vs. Groceries, Amazon vs. Local Retailers, Airplanes vs. Road Trips. Everything just seems like a winner-take-all contest and it’s exhausting. The problem with “vs.” compared to “and” is that it results in winners and losers, with big consequences for society and for markets. We’ll focus on the impacts on markets since that’s our role. The S&P500 this year has only gained 1.2%, which is far below average. But it hasn’t been a boring year. The S&P, sitting at 3,270, has moved about an equal 3,400 points up and down this year. The market’s gone [...]

Monthly Outlook: October 2020  It’s been a long summer as most of us muddle through an endless list of uncertainty and stress: coronavirus, recession, schools, work, travel, politics, and more. Of course, these issues all factor into markets and volatility, too. In 2020, US stocks first went up 5%, then down 33%, then up 58%, then down 9%. Would you believe that for the year, US stocks are now up just 5% after all this (that’s how the math works). That’s a lot of volatility and stress for a modest return. International stocks have had a similar wild ride in 2020, but they are down 5% YTD. Bonds, on the other hand, have had steady returns and are up about 6% YTD. Gold has delivered a gain of 24% YTD. Even with the volatility, our clients’ portfolios are doing well. Our iFolios 75 portfolios, for example, are up about 4% [...]

Monthly Outlook: September 2020  Can you imagine you’re Rip Van Winkle and you’ve been asleep all 2020? (If only!). Forgetting all the other “stuff” that will define 2020, think of it purely as an investor. If you had been asleep these past eight months and just awoke to look at your typical growth portfolio, you’d notice a small gain of about 5%, YTD. Ho hum, what’s the big deal? Instead, you’re probably very awake and have experienced the following: A mild start to the year, a global virus outbreak and pandemic with no cure yet, a stock market collapse of 33% followed by a surprising stock market recovery of 56% resulting in an 8% YTD gain, record high unemployment of about 11%, an official recession, school closures, restaurants that are operating at half-speed, and an upcoming US Presidential contest of stark contrasts. Considering all of these happenings, it’s remarkable that [...]

Monthly Outlook: August 2020  It was a good July for our investors, virus be damned. Stocks continued to rebound for a fourth month (remember the plunge in March) on hope and stimulus. The S&P500 is now back to positive for 2020, up 2.49% YTD. International stocks are following a similar pattern for 2020 (plunge and rebound) but are still down 2.69% YTD, unfortunately.  Bonds are plugging along, doing what bonds normally do. The Barclays Aggregate Bond Index is up 7.9% YTD. Short-term bonds are only up 4.3% YTD. We can thank plunging interest rates for the strong bond returns (bond prices go up when interest rates go down). The 10-year US Treasury bond rate has dropped from 1.92% on January 1st to 0.53% today. Wow. Although bonds have done well YTD, it’s hard to fathom how they continue their run when interest rates are near 0%, but we’ll see. Lastly, [...]

Monthly Outlook: July 2020  In early June, the NBER declared that the U.S. officially began a recession in February. That’s pretty obvious to anyone paying attention. The virus stopped the world economy in its tracks unlike any war or catastrophe ever has. The initial shock drove the stock market down 33% in March. Then, hope and stimulus helped to fuel a stock market rebound of 35% in April, May, and June. Today, stocks (S&P500) are just 9% lower than the peak in February. It’s hard to rationalize that the world is only 9% worse off today when compared to February, but that’s how stocks are priced. Let’s consider the facts: Unemployment has spiked to about 13%, a record high since the Great Recession levels of the 1930s. Corporate earnings of the S&P500 have already sagged from $139/share at 2019 year-end to $116/share by March 2020. Professional analysts expect earnings to [...]