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Newsletter: 2020-Q4 Quarterly Update Thumbnail

Newsletter: 2020-Q4 Quarterly Update

Today, let’s pause and take a moment to reflect on the wondrous powers of small, quiet acts.

Pandemic aside, there have been plenty of great, big, year-end reviews and year-ahead teasers clamoring for your current attention. Describing 2020 as an “everything rally,” One Wall Street Journal columnist wrote, “Investors ended one of Wall Street’s wildest years on record by piling into everything from bitcoin to emerging markets, raising expectations that a powerful economic comeback will fuel even more gains.”

The excitement is not entirely unfounded. Last March, when the S&P 500 dove into a bear market almost overnight, it was hard to expect anything but a long, grim year ahead. Of course, in hindsight, we now know markets rebounded nearly as quickly as they plummeted. They ultimately delivered strong annual returns across most domestic and international asset classes. The fourth quarter was no exception to this tale of remarkable resilience.

Why would markets soar during still-sour economies? As discussed in a previous blog, we could describe any number of rational reasons, the economy and markets are not always related. To read more on this topic, click here.

Unfortunately, that hasn’t stopped hordes of hopefuls from trying to score big on the latest tricks of the trade. From record-busting bitcoins to blank-check SPACs, rising markets often tempt the uninitiated with enticing offers to earn “easy” money.

Whether the temptation is to abandon a free-falling market (like the one we encountered less than a year ago) or chase after winning streaks, an investor’s best move remains the same. Concentrated bets on hot hands generate wildly unpredictable outcomes, making them far closer to being dicey gambles than sturdy investments.

Trust, instead, in the durability of your carefully planned investment portfolio. Focus instead on small acts. We’re here to remind you of things such as:

  • Your globally diversified portfolio already holds an appropriate allocation to Tesla stock (which may be a lot, a little, or none, depending on your financial goals).
  • Rebalancing your portfolio if recent gains have overexposed it to market risks.
  • Interpreting the 5,600 pages of the newly passed Consolidated Appropriations Act, 2021, so you can manage your next financial moves accordingly.
  • Assessing potential ramifications of the Biden tax proposals and advise you on any additional defensive tax planning that may be warranted for you in the years ahead.   
  • That we will be by your side as you encounter whatever challenges and opportunities 2021 has in store for you and your family.

These aren’t acts you’ll read about in the paper, but they are the stuff financial dreams are made of.

How else can we help you achieve your personal financial goals? We’re here and ready to assist in any way that we can.

Recent Insights from Black Walnut Wealth Management