Key items you need to know –
The first three months (Q1) is over. After a straight up run in the market through mid-March, the more volatile and high-growth sectors pulled back a bit and recovered some in the last week of the Month. Overall, the broader market hit all-time highs and the Administration announced a $2T Infrastructure package to compliment the $1.9T recent passage of the Stimulus package. This mean there will be a “sugar high” for the next 12-18 months. As the vaccine becomes more widespread to those that want to get it, this will create major production increases in manufacturing, the services sector will expand and the hospitality and travel industry by return to 75% or better where it was before COVID started. This means if you are “Growth-oriented” for your portfolio, you should consider to “stay the course” with your winners and ditch your losers and add those proceeds to your winners. If you are closer to retirement (within 3-5 years), you should consider holding tight for a while and then start to slowly harvest profits over a longer period and be smart and not greedy.
Q2 2021 – What to look for…..
Corporate Earnings announcements will start next week and is expected to see several “in-line and beats” reports. We are also expecting several “raises in earnings expectations for balance of 2021” due to the recent Stimulus Package approval and Infrastructure proposal. There will definitely some significant winners due to all the money that will be printed. Industries and businesses that will benefit; Electric Vehicles (EV) focused-manufacturers and complimentary businesses like charging stations, 5G infrastructure and devices, Steel & Rubber manufacturers, Cooper miners, Clean Energy groups, Equipment Rental companies focused on construction, Chemical companies and many more.
As it gets warmer, companies that are focused on activities outdoor-related should do well as many people will feel more comfortable coming out of their cocoon’s and looking forward to doing some trips, albeit local, regional or national. Look for a boom towards the end of the summer and early fall for the mentality of people to truly begin changing. Unless there are major spikes with COVID cases, this summer will be very different in a positive way for most people.
Again……the Explanation of the “Rule of 55”
Under the terms of this rule, you can withdraw funds from your current job’s 401(k)
or 403(b) plan with no 10% tax penalty if you leave that job in or after the year you turn 55. (Qualified public safety workers can start even earlier, at 50.) It doesn’t matter whether you were laid off, fired, or just quit.
The distributions are not completely tax free: Like all withdrawals from a traditional 401(k) or 403(b), you do have to pay income tax. (The employer is required to withhold 20% from any Rule of 55 withdrawal for federal income tax, which is non-negotiable.) Only the 10% tax penalty is bypassed in this scenario.
In addition, note that employers are not obliged to allow early withdrawals; and, if they do allow them, they may require that the entire amount be taken out in one lump-sum withdrawal. This could expose you to a higher income tax.
This rule applies to current – not former – 401(k) or 403(b) plans. The government does not permit penalty-free withdrawals before 59 ½ from plans you had with a previous employer. If you want access to that money under the Rule of 55, you would have to transfer those funds into your current 401(k) or 403(b) plan.