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February 2021 Market Update

The quote “History does not repeat itself, but it often rhymes” is most often attributed to Samuel Clemens a.k.a. Mark Twain.  I have often ruminated on this idea and continue to find it true.  I recently wrote a short article and recorded a video looking back 100 years.  Not only did the U.S. have some major inventions like the Model T and the radio becoming mainstream, but we were also coming out of the Worldwide pandemic, the Spanish Flu, and a great deal of political unrest.  It is interesting to me that while this time was a difficult one for the United States, it led to what is now known as the Roaring 20s.  Despite some who would point to our many current challenges, we are setting up for another Roaring 20s 100 years later.  Below are the topics I will cover in today's update.
  • Expanding Economy
  • What is Rhyming
  • Why We Could Be Wrong
Expanding Economy:

Housing is still hot. New housing starts, building permits, and existing home sales are all rising as mortgage rates remain low.  The recent decades of mass migration into city centers have been reversed by the pandemic and work from home situations are likely here to stay.  With housing booming, businesses that support this industry are also getting a boost as people furnish those new houses, buy tools, spend money on services to take care of them and insure them. 

As stimulus money continues to flow into the market, demand for seemingly everything has led to a boon for the manufacturing sector which is also making up for lost time during the pandemic shutdowns.  This money is flowing into the economy and because interest rates are so low there is a strong incentive to either spend or invest in the equity market instead of saving money in a traditional bank account.

We anticipate this expansion to continue for some time. 

What is Rhyming:

The recession that happened quickly early last year was a bit different than most in that it was caused by an external factor rather than a market or economic-based one.  It was caused by the pandemic.  Before the pandemic fear took hold, the economy and markets had been strong.  Now that there is a perception that the worst of the pandemic may be behind us, the market would seem to have an opportunity to pick back up where it left off.  One hundred years ago there was a recession and it too was caused by two major external factors; the return of thousands of soldiers from the War who were then suddenly unemployed and the aftereffects of another pandemic, the Spanish Flu.  The War had pushed many innovations ahead faster in manufacturing and more efficient operations.  This time the COVID pandemic has pushed innovations forward faster than normal as well.  For instance, the new technology and AI testing to get vaccines developed and put to work.  So, while history is not repeating, we would argue there are some similarities.

Why We Could Be Wrong:

The question rarely asked and even more rarely answered by those giving opinions on the future of the markets is “How could you be wrong?” 

Several risks remain, not the least of which is that over 30% of small to medium-sized businesses still operating feel that they will shut down if conditions persist for three to six months longer according to a recent PNC bank survey.  If more aid is not delivered in a timely manner, we could see another wave of shutdowns and requisite job losses possibly derailing the bounce in job gains from the worst months of the recession.  There are other risks as well.  We still do not know the long-term impact of the virus on individuals that were infected.  We also do not know for sure how effective the current vaccines will be or if there will be unintended consequences to the new technology. 

For these reasons, we recommend a diversified portfolio tailored to your specific needs which can only be accomplished with an in-depth conversation directly with you or your organization.

If you have any questions about the information discussed here, please schedule a call with us by clicking here.

Phone: (312) 372-5000

John Browning, MBA and CSA®
CEO, Principal
As a certified financial adviser, Mr. Browning serves as the Chief Executive Officer for Guardian Rock LLC. In addition to providing oversight to the activities of the entire firm, Mr. Browning also leads the investment committee and is directly involved in client interaction and portfolio decisions impacting specifically customized portfolios. 
Mr. Browning is a graduate of Cedarville University in Ohio and later obtained his MBA from Northern IL University. John is a Certified Senior Advisor (CSA®) and holds multiple securities licenses including Series 6, 7, 63, 65, 24 among others. John brings over 30 years of Wall Street experience in analytical, economics and portfolio management background along with many years of leadership and strategy experience. John has served in various executive-level roles in the financial industry at large Wall Street firms including Morgan Stanley, Invesco, Guggenheim, and Nuveen where he obtained extensive experience managing billions in fixed income and equity.

Nothing in this communication should be construed as personal investment advice and past performance is no guarantee of future results.  Investing is not appropriate for everyone. There is a risk of loss associated with investing in the markets.  No representation or implication is being made that using any methodology or system will generate profits or ensure freedom from losses. Please remember that investing carries risk.  Guardian Rock Wealth LLC and its affiliates are fiduciary investment advisors.  Please consult with us or another experienced,  qualified investment advisor before making any investment decisions and/or trying to implement any of the strategies and tactics we may discuss in any of our publications.