The end of February showed a pullback in the market indicating an overvaluing of stocks, especially in key sectors. With the JnJ one-shot vaccine expected to be approved for emergency usage, this should give a temporary boost to the market. You need to continue to look long-term in matters of investing and opportunity. Last month we gave you a list of sectors we expect to continue to do well both short-term and long-term as these are “thematic investing” ideas.

Look out! Have you received a stock tip from the person cutting your hair? or how about your neighbor? or a distant relative? or how about the shoe shine boy (old school reference)? If you have, that could mean a lot of things. Yes, many people see the stock market as a casino which is a shame and a travesty. In some respects and select stocks and sectors, it is being treated that way and sending the wrong message to small and young investors that are looking to make a quick buck instead of seeing the big picture and long-term view.

If you have read this newsletter over the years you know that I have told the “secret to building wealth”, it is; “Consistent Contributions, Reinvestment of Dividends over a long period of time”. Thats it, as it really is that simple. With that as your baseline understanding, now you want investments that are focused on that investment methodology. Meaning, we aren’t encouraging high volatility or speculative investments unless your portfolio is large enough and you want to put a small percentage into those stocks. If not and you are still in the “building mode (accumulation stage)” of your portfolio, then investing in funds that are focused on the long-term or companies that are focused on growth and also established companies that pay dividends and raise them every year are always quality investments. Focused, grounded investing is always the best way to go.

Many stocks that have run over the last 3-4 months have pulled back, this is healthy and expected. What does that mean, healthy and expected? Stock prices are rarely ever at the “right price”. When it rises or falls, it usually overshoots to the upside or downside, then settles and price consolidates for a while until it has its next catalyst move. Many times this brings opportunity to add before its takes its next leg up. The stock price cannot continue to go up forever as you can look at history with companies like GM, AT&T, IBM and GE. These stocks were the companies to own 30, 40 and 50 years ago or more. Many referred to them as “forever stocks”. What happened to them in the last 20 years? No history lesson needed, you know they essentially went no where but mainly down from their all-time highs. GM went through bankruptcy and re-emerged again and is doing well. Remember there are cycles to the market, companies, sectors and the economy. The economy is doing well in some areas, but still struggling in the hospitality and travel sectors and will continue for quite some time. As the vaccine rolls out, these industries will get better. The Spanish Flu of 1918 took 18-24 months to get through its major cycle and that was with inferior medical knowledge and technology compared to today. Per our 2021 Market Outlook Report (you can get a copy via a link later in the newsletter), we do expect a big 2nd half of 2021, but not sure how that will translate to overall stock market upside as some of that upside may already be baked in. Overall, we are looking for 10%-15% upside at the minimum, especially if more and more people take the vaccine and take the necessary precautions in public situations. Other economic factors such as GDP, CPI and Employment numbers are looking good and trending in the right direction. If we see that going into the summer, look for a lot of cash on the sidelines to be put into the stock market and make a summer rally something worth getting out the popcorn in anticipation.

Similar to last months summary, don’t pay too much attention to headlines that don’t affect you. This is the easiest way to keep your sanity and get good sleep. Unless there were major changes in your life, no reason to change your investing strategy for now, but you need to assess on your own.

As always, be well, stay safe and healthy!