In today’s Steady Investor, we look at key factors that we believe are currently impacting the market, such as:
Will the Energy Sector Recover in 2021? The S&P 500 Energy sector was by far the worst performer last year, posting a -33.7% decline. The next worst performers were Real Estate (-2.2%) and Financials (-1.7%), while every other sector in the S&P 500 posted a positive return. The source of Energy’s miserable performance in 2020 stemmed largely from plummeting demand for oil, as the global economy endured pandemic-induced shutdowns and major curbs to travel. The biggest global oil companies are posting their weakest annual performance in over two decades, with Exxon Mobil and BP reporting annual losses of $22 billion and $18.1 billion, respectively. The biggest oil companies have scrambled throughout the past year to revise their oil-and-gas assets and rethink or abandon expensive projects. From an investor perspective, the outlook for energy on the demand front is better, and generally speaking, one might reasonably expect some mean reversion following a terrible 2020. But the longer-term outlook for oil and gas companies is less certain, particularly as the climate comes into greater focus.1
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Let Us Help You Navigate Your Investment Goals Through 2021!
We’ve all experienced volatility in the market during 2020, but what does 2021 have to offer? Are you financially ready for both negative and positive outcomes? Even though this year has the potential to be a huge year for the market, how long will it take? The key is to not focus on uncertainties you may have, but to prepare for any situation that better protects your financial investments in the long run.
In this report, we make predictions for the sector under and over performers, while also providing thoughts on possible outcomes of 2021. We will look at:
If you have $500,000 or more to invest and want to learn more, download your guide today!
Download Our Just Released, “February Market Strategy Guide”2
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U.S. Construction Spending Rises, But Not for All Categories – US construction spending continues to tick higher, but the spending is not benefiting all categories of real estate. Specifically, the final quarter of 2020 showed increasing divergence in spending between home builders and commercial contractors, with home builders seeing record growth. With mortgage rates remaining low and many Americans choosing to leave cities for more space in the suburbs, private residential construction is booming. Meanwhile, private nonresidential construction for buildings that house hotels, offices, health care facilities, and retail stores have dropped for six consecutive months.3
Silver Was Hyped as the Next GameStop. It Wasn’t – Perhaps predictably, the GameStop/AMC mania of last week has given way to steep declines this week. In our view, for every story of a retail investor making huge profits in GameStop, there were probably ten untold stories of investors who posted big losses. This week, the story shifted to commodities, as participants on online forums suggested that a buying spree of silver could generate big GameStop-like gains. The chatter triggered a (very) short-term rally in iShares Silver Trust, but the ETF is now flat for the year. The bottom line: creating a short squeeze in silver, as was done in GameStop, is impossible. In order to create a GameStop-like outcome for silver, an investor would need to hold large quantities of the metal. Most retail investors don’t hold any silver at all and would have a challenging time building up a position — given the $50 billion market for coins, bars, and other silver investments — and given restrictions on the size of positions that retail investors can take.4Predictably, the rally didn’t last very long, and shares of silver producers are plummeting. Our advice to retail investors as more of these online forum-driven trade ideas pop-up: steer clear.
Economic Forecasts See Strong 2021 Growth, But Lagging Job Gains – We take forecasts from the Congressional Budget Office with a grain of salt, as they are usually wrong. But the general thrust of the CBO’s latest outlook for the US economy seems reasonable, as they are calling for the economy to return to pre-pandemic GDP output by the middle of 2021. The jobs market may not claw back to pre-pandemic levels as quickly, however. Temporary job losses have been turning permanent over the last two quarters, and many businesses are rethinking how many workers they need on staff to run efficiently. With online work and e-commerce being catalyzed by the pandemic, many jobs are no longer needed – and may never return. As the economy grows, new jobs will likely be created.5
Managing Expectations of 2021 – 2021 has the potential to be a huge year for the market. As many investors are managing their expectations of what this year will bring, let us help you by focusing on key data and facts! In our just-released February Market Strategy Report, we make predictions for sector under and over performers, while also providing thoughts on possible outcomes of 2021.
We will look at:
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free report today!
Disclosure