In this week’s stock market review, we will review our key takeaway for the week, along with a thorough performance review of the past year. Afterward, we will unveil our key investment themes for 2021, the impact of politics on stock prices, along with a discussion of how attractive stocks are priced relative to other asset classes. We will wrap everything up with a discussion of the warning signs we look for ahead of a potential bear market and whether those signals are flashing red or giving the all-clear.
The bottom line is that it’s important to learn from history. The old adage that “this time is different” is one of the most dangerous phrases on Wall Street because it seeks to change the outcome when the variables remain the same. Similar to November, the election outcome in Georgia will lead to emotion and fear, but it won’t convert a good company into a bad company or vice versa. We will wake up tomorrow, order a coffee, google something online, and buy something completely unnecessary on Amazon. Stay focused on investing in companies leading positive, disruptive change and mute the T.V.
In the period leading up to the U.S. general election, many investors feared that certain election outcomes would throw the stock market into turmoil. While we sympathized with such fears, we also coached clients on the importance of separating the political distractions of D.C. from the substance and weight, such as corporate fundamentals that ultimately determine the direction of stock prices. Disciplined investors were rewarded in the month of November with one of the best months ever for stocks.