Jay Gadberry is a registered representative with National Securities Corporation, member FINRA/SIPC. Investing involves risk including loss of principal. This is for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation of any products or services. Opinions are subject to change with market conditions.
What are the top three things you’re watching as 2021 kicks off?
One, the COVID-19 vaccine rollout. We need to avoid hiccups to prop up optimism in our battle against this virus. Two, we need the service economy to return. For example, The National Restaurant Association reported in December that 110,000 restaurants have closed permanently with another 400,000 in economic free-fall. Three, we need job numbers to improve. See the response above. If rising joblessness continues, more stimulus will be expected. If no stimulus comes, optimism wanes. If new stimulus comes, we face the burden of paying for it.
What is the case for optimism in the markets in 2021?
The existing combination of recovering growth, low inflation and loose monetary policy are good macro backdrops and we hope the emergence of multiple vaccines will mark the beginning of the end for the COVID-19 pandemic.
What is the case for pessimism in the markets in 2021?
The fight against the coronavirus may hold the key. We must stay in front with vaccines and responsible behavior so that our economy can continue to open. Investor attitude will play a huge role. A little less divisive rhetoric would probably help!
Should I prepare for the possibility of a pullback in the financial markets?
Pullbacks are part of healthy investment cycles. The markets seem to have priced in a stronger economy and the arrest of the pandemic, but disappointment in the recovery could rattle investors. We prepare with rigorous asset class diversification, a disciplined approach to our investment decisions, and as always, looking for opportunities in a pullback.
I’ve always heard that the markets prefer a divided government most. Now that the Democrats control both the legislature and the executive branch of the government what are you most concerned about?
That is certainly a popular refrain, but the facts don’t necessarily support it. The Democrats will have the ability to pursue a progressive agenda many fear could be considered anti-business. However, there are many forces beyond political parties that bear influence on our financial markets. It’s our responsibility to navigate on behalf of our clients.
Coming into 2020, the trade war between the U.S. and China was a big concern for investors. Will that come back in 2021?
Many feel that The Biden administration will probably not be as confrontational and does not seem as keen on tariffs. However, the two countries’ economic and political interests will continue to diverge. Sentiment remains negative on both sides. The tensions aren’t going away
2020 certainly focused on the topic of politics, will we be talking about elections as much in 2021?
Short answer, I hope not! I do feel politics will be an important topic through 2021. We appear deeply divided, and I do think healthy, bipartisan discourse is important. It is our job to navigate the markets, no matter how turbulent, on behalf of our clients, understanding that volatility creates opportunities.
So are you Bullish or Bearish?
I wish it were that easy! We are bullish in certain areas and anytime opportunities arise, even in the midst of bearish sentiment. And we must remain vigilant and disciplined, exercising caution even when everyone around us is chasing excess return.
Securities offered through National Securities Corporation (NSC), Member FINRA/SIPC. Advisory services provided through National Asset Management, Inc. (NAM), an SEC Registered Investment Advisor. Fixed Insurance products offered through National Insurance Corporation (NIC).
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