The markets still seem to be driven by the vicissitudes of both the “reopening” trade as well as Fed policy (via massive and ongoing stimulus).
It’s halftime in 2021! In one of the best first halves since 1998, US stocks have enjoyed extraordinary gains since the Covid-19 bear market, yet there is no clear leadership trend (such as technology, innovation or “reopening” from April through December 2020). Furthermore, other areas that thrived during the pandemic (such as clean energy) became overbought, then reverted to their mean, and are now regaining strength.
Driven by optimism related to both reopening of the economy and massive government stimulus, market leadership shifted from growth to value stocks last fall, including financials, energy, materials, and industrials. Performance of these sectors was largely driven by rising prices, after a prolonged period of underperformance.
There is still a tug of war between growth and value, where in June 2021, growth rallied back up and value, which led the way for several months, dropped. We have in fact increased our positions in BOTH for this quarter model update (made 7/1/21), by adding Dodge and Cox Stock find (DODGX) and i-shares Core SP 500 (IVV). We have also added some exposure to larger China growth stocks (GSAIX), with concentration exposure to technology and other innovation-oriented companies.
Data shows US consumer confidence reaching highs, given the stronger economy and job market. Home prices jumped the most in more than 30 years in April 2021. Earnings season gets under way soon, and aside from some of the reopening trades (travel, leisure, etc.) sinking over concerns about further spread of the Delta variant, we have conviction in the upward trajectory of equity earnings and remain positioned as such. As markets evolve, we will advise and adjust where needed.
As We Will Consistently Counsel Our Clients:
1. The plan drives the portfolio – not the other way around.
2. Unless your plan changes, do NOT change your portfolio.
3. We do not know or care where the markets will move, as we cannot control them.
We design our various portfolio models around quality investments, and in engineering the portfolios so we know HOW they will respond WHERE the overall market moves. This way we may assist you in choosing the portfolio best suited to your individual volatility preferences and liquidity needs.
Be Well and Invest Wisely,