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A Look Into 2021

A Look Into 2021

January 15, 2021
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America breathed a sigh of relief when 2020 came to a close, and we could finally put the tumultuous year behind us. With clarity about the COVID19 vaccine and outcome of the presidential election, markets ended the fourth quarter on a high note. However, despite turning the page on the calendar year, an interesting start to 2021 has produced a slew of funny memes that our resolute optimism might have been unfounded.

  • “I’d like to cancel my subscription to 2021. I’ve experienced the free 7-day trial, and I’m not interested.”

  • “Seems a lot like 2021 keeps asking, ‘What would 2020 do?’”

  • “So far, 2021 is just 2020 with bangs.”

All joking aside, we learned some valuable lessons last year that we should not quickly forget. First, we can’t pretend to know what’s going to happen – January has clearly shown us that with the Georgia Senate election and protest at the nation’s Capitol. The things we thought we knew and comfortably took for granted are not a given. Even the fundamentals of investing proved to be largely unhelpful in 2020.

Second, it’s important to have a plan and try your best to be ready no matter what this year brings, but it’s just as important to be flexible. 2020 required that we all adapt, and that can be a good thing – prompting innovation in our schools and businesses and building healthier habits at home and work. Technology was the best-performing sector of last year thanks to pandemic-related changes in behavior and a large number of investors eager to capitalize on its growth. Despite a sizable rebound in the fourth quarter, the energy sector was the biggest laggard of 2020.

Although the market took the drama of 2020 in stride overall, we enter this new year with lingering uncertainty and justifiable concern. Unemployment remains historically high – well above levels we saw at the depths of the Great Recession. Small businesses still struggle to survive despite continued federal stimulus. We remain wary of the negative consequences of ballooning federal debt and budget deficits. However, on their own, none of these risks offset the positive factors helping the economy and markets, and the macroeconomic outlook for 2021 is positive.

How the markets fare in 2021 will depend on whether predictions about company performance were warranted and are confirmed. Year-over-year earnings likely will appear shocking, but faith in the data and a commitment to flexibility will carry us through. It’s sure to be another interesting year, but as we learned in 2020, a well-planned, diversified financial plan focused on your long-term goals can withstand virtually any market surprise and a related bout of volatility, including the worst pandemic in 100 years.