Zacks Investment Management

In today’s Steady Investor, we take a look at key factors that we believe are currently impacting the market, such as:

• Americans record-breaking mortgage activity
• Housing market strengthened in 2020
• The regulatory push against big tech intensifies
• Signs of strength across metal markets

Record-Breaking Mortgage Activity – The pandemic and associated lockdowns caused major disruption in many parts of the economy – but not housing. In 2020, Americans are on pace to take out more mortgages than ever before, which would mean exceeding the prior record of $3.7 trillion reached in 2003. 15 years ago, the surge in mortgage lending was driven in large part by subprime lending and excess risk-taking. Today, the surge is being driven by record-low interest rates and a drive to refinance. In the first three quarters of 2020, refinancing applications made up 65% of all originations.¹

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Use Market Volatility to Your Advantage!

With the unknowns and outcomes that are stemming from this current pandemic, it’s a challenge for investors to adjust to market volatility. Predicting the future can result in discomfort and uncertainty. As we wait for the market to fully recover, we recommend that investors learn the positives of volatility.

If you have $500,000 or more to invest, get our free guide, “Using Market Volatility to Your Advantage” and learn our insights, based on decades of experience, about how a volatile market may be able to actually help investors refine their strategies and potentially generate solid returns over time.
 
You’ll get our ideas on:

• How market volatility can “shake up” complacent investors
• Potential bargains that may be uncovered through turbulence
• Why volatility may help prevent overheating and market “bubbles”
• What history shows us about opportunities for steady investors in turbulent markets
• Plus, more ways you may be able to benefit from a volatile market

Download Our Guide, “Using Market Volatility to Your Advantage”²

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30-Year Fixed Mortgage Rates Hover at All-Time Lows

Source: Federal Reserve Bank of St. Louis³

New buyers are also flooding the market, in what Toll Brothers CEO framed as “the strongest housing market I have seen in 30 years.” Many millennials are entering the market as first-time home buyers, nudged into buying as a result of moving away from cities and into more rural areas with more space. Housing strength on the level we’re seeing in 2020 cannot persist long-term, however, and we’d expect to see a softening in activity in 2021.

The Regulatory Push Against Big Tech Intensifies – A few weeks ago, the Justice Department brought a landmark case against Google, accusing the company of being anti-competitive in regards to its search business. The regulatory headwinds against Big Tech grew stiffer this week: The Federal Trade Commission (FTC) and 46 states sued Facebook, accusing the company of thwarting competition through acquisitions. The Facebook and Google cases mark two sweeping antitrust cases that may just be the tip of the iceberg for some of the biggest companies in the world.⁴ In the Facebook case, the suit is seeking to unwind Facebook’s acquisitions of WhatsApp and Instagram, while also accusing the company of weakening privacy protections for consumers. The cases against Google and Facebook may take years to play out, but one thing seems clear – the days of total impunity for tech giants are fading fast.  

Commodities Rally May Signal Expectation of Future Growth – When making forecasts for future economic growth, it’s important for investors to consider leading indicators that may offer clues for expected activity. One of those indicators, interestingly, is commodity prices – particularly industrial metals. Industrial metals are used in a wide variety of ways, from building houses to expanding plants to manufacturing cars. Anytime we see a uniform rise in commodity prices when the economy is signaling expansion in other areas, it often serves as confirmation that investors and producers are betting the recovery will continue. In the past several weeks, we’ve seen signs of strength across the metal markets – copper has risen to its highest level in eight years, iron ore is one of the best performing assets in 2020, and aluminum and zinc are up at least 40% since early summer. China’s swift recovery has ushered in much of this support for metals, but the expectation for a broader global economic recovery may be pushing prices even higher.⁵

Finding Silver Linings amid the Pandemic – During this time of constant changes in the market, it may be hard to find the silver linings in the current crisis, but that doesn’t mean they aren’t there. To help give you additional insight into how you can make the most of turbulent times, I recommend reading our guide “Using Market Volatility to Your Advantage.”⁵ 

This guide can help you learn about our insights, based on decades of experience, about how a volatile market may be able to actually help investors refine their strategies and potentially generate solid returns over time.
 
You’ll get our ideas on:

• How market volatility can “shake up” complacent investors
• Potential bargains that may be uncovered through turbulence
• Why volatility may help prevent overheating and market “bubbles”
• What history shows us about opportunities for steady investors in turbulent markets
• Plus, more ways you may be able to benefit from a volatile market

If you have $500,000 or more to invest, download this free guide today by clicking on the link below.

Disclosure