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Atlas Market Outlook – March 2021

Money Management Newsletter & More

Atlas Market Report
March 2021

Market Commentary (Key items you need to know):
  • Market Outlook by Ronald E. Lang
  • Additional Market Commentary
  • 2021 Market Outlook Report (Downloadable)
  • Fun Links (always popular and NEW)
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Key items you need to know –
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.

Investing for the balance of 2021

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.

Expectations of the Economy and Stock Market

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.

Charting the Market (and what may possibly be next…..)

The S&P 500 index never fell below the 3,860 level for 3 consecutive days going into February and has been holding the 50 Day Moving Average as very strong support. If the index falls below the 50 Day Moving Average for 3 consecutive days, then we are looking at lower-levels of 3,560 – 3,625. If not, we may be looking at 4,000 by June.

In Summary

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!
Authored by
Ronald E. Lang, Principal
Atlas Wealth Management, LLC
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Additional Market Commentary

Submitted by Allen B. Lang, Senior Portfolio Manager

(Opinion)

February is over

Yes, historically February has not been a strong month, and so it happened. After the markets hit new highs early in the month, the averages fell off over 3%. I firmly believe this is not an omen of things to come. The economy grew at about 4% in December and I think the numbers for January and February will still show some growth.
I am not an economist. I have listened to several on the news that say our economy could have a 5-7& growth this year. I think they are wrong. Just what I have seen in the past six months I believe our economic numbers can increase by upwards of 10%. As I said back in March or April, the US is “too good to fail”.
This doesn’t mean we will not have volatility in the markets, that will continue until the SEC can curtail
ridiculous activities by day traders and hedge funds. I won’t go into a market teaching session here, but one rule that was taken out of the market was the “up-tick” rule. Please look it up in Google. This was a very important deterrent to those who wish to “control” the markets and scare REAL investors into not investing. This rule was taken off the books in the early 1970’s when the Exchange Traded Options began. With the advent of Puts and Calls, it gave investors, and speculators, a way of trading securities whether they go up or down. Options can also be used to hedge against losses as well as for additional income.
Recently there has been a significant spike in oil prices and regular gasoline is almost $4 a gallon, up 60c from three weeks ago. Not to try and get political here, but the shutting of the Keystone Pipeline, enabling us to get oil to refineries quickly and more safely that trucking and rail, has caused fears that the US will not be self-sufficient fuel wise, and have to buy from overseas. Limitations on new drilling for oil and natural gas has caused a rise in oil futures, hence, higher gas prices. So much for looking out for the “small guys and women”. Whatever stimulus is given will be quickly used up in essential goods and products we need every day. I am all for capitalism and people making higher wages and having a road to promotion and a better standard of living. However, I fear that Congress may be acting too quickly to raise the minimum wage. As an example, most wait-staffs in restaurants make the minimum $7.25 an hour. That’s because they can earn considerably more by earning gratuities (tips). Raising their minimum wage to $15 an hour may cause employers to cut employee hours Hence, some may lose benefits like health care, because they would not be considered “full time”. It’s just simple economics, costs go up, so does the cost of service, and employers have to adjust to make profits.
Ok enough of that. Congress sometime in the second quarter, I believe, will follow most states and make cannabis a legal “drug”. This will mean a wind-fall for the US in tax collection, and manufacturers will be finally able to deposit their monies into federally insured banks. I believe that with the large group of cannabis growers, there will be a good deal of consolidation in the industry. Many broker/dealers will not allow clients to purchase cannabis securities, mainly because it is a Schedule 1 drug. But this too shall pass.
My wife and I have received our 2 COVID inoculations. No pain and no subsequent issues. I encourage you to get your shots. Be safe. And good health to you all.
Allen B. Lang, Senior Portfolio Manager
Atlas Wealth Management, LLC
Allen.Lang@AtlasBuildsWealth.com
888.403.9400

2021 Market Outlook Report

These are the topics included in this free report:

  • 2020 Year-in-Review
  • Thoughts on COVID-19 in 2021
  • Industries and Sectors (which will perform and which will underperform)
  • Portfolio Allocation and Changes Related to Risk
  • Overall Outlook for 2021 and Stocks in General
  • Last Thoughts on Investing in 2021
Is now available “DOWNLOAD IT!”
DISCLOSURE: We like to make this newsletter a “quick read” with small bite-sized chucks of topical information so you can understand what’s going on in the markets and economy and if it may affect you, give you time to make the steps necessary to protect yourself or take advantage of it. This newsletter for purely for Entertainment Purposes Only!