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Looking Ahead to 2021 - December 16, 2020

Assuming we don’t see a steep pullback in stocks over the last two weeks of December, the major averages will finish higher for the year.

Let’s look ahead. What might influence shares next year?

 

Positives

  • The economy is expanding.
  • An expanding economy would likely fuel higher corporate profits.
  • The Fed has pledged to hold short-term interest rates low.
  • Substantial amounts of liquidity remain in the financial system.
  • Distribution of the vaccines promises to slow the virus next year and remove hurdles to economic activity.

Risks

  • Vaccine distributions problems could surface.
  • Congress may deadlock on new fiscal stimulus.
  • Is there too much complacency that long-term interest rates will remain low?
  • Economic uncertainty is high.

Investors corner

The unusual amount of economic ambiguity this year didn’t prevent a massive stock market rally off the March low.

It’s one more example that timing markets based on imperfect economic information can lead one astray.

Well-diversified financial plans tailored to your specific needs have historically provided the most effective path to one’s financial goals.

If you are adhering to a well-diversified holistic plan, you are to be congratulated. You have chosen the less traveled road.

@LWMLLC