May 2021
Our positioning continues to favor a return to normalcy and economic expansion that is beneficial to value stocks. Value stocks are still attractively valued despite their year-to-date outperformance. We remain a relatively short duration within our fixed income sleeve.
May 2021
February 2021
As the economy continues to recover from the pandemic, driven by inoculations and expectations of a return to normalcy, inflation expectations have risen. This is confirmed by several underlying data points indicating risks to the upside.
February 2021
April 2021
We are watching closely as the economy continues to re-open and things are beginning to return to normal. We believe this is one of the strongest economic rebuilds in history and the rate will begin to rise in anticipation of FED tightening. To learn more watch the video!
April 2021
2021 Investment Strategy & Outlook
We believe the big picture for 2021 will be a broad-based re-opening of the economy. As businesses begin to get back to normal, we anticipate above-average economic growth for the next one to two years. Our 2021 outlook walks through six key factors.
2021 Investment Outlook and Strategy
March 2021
As the vaccination rollout continues to accelerate and states begin loosening COVID-19 restrictions, our investment thesis of economic growth over the next two years still remains intact. The government has also been quick to react with economic stimulus, which is positive.
March 2021
November 2021
We may not have a declared winner to the 2020 Presidential contest of November 4th, we have the needed information to begin positioning our portfolios for the future. Now, it seems Congress will stay divided, with Republicans retaining control of the Senate.
November 2020
While we may not have a declared winner to the 2020 Presidential contest as of November 4th, we have the needed information to begin positioning our portfolios for the year to come. As of this writing, it appears congress will remain divided, with Republicans retaining control of the Senate. This may prove to be a more important factor than which Presidential candidate wins. Because it is more difficult to make sweeping changes, markets typically prefer a split congress through history. With a divide, business operators can more effectively move forward with their growth plans without fear of the rules changing. This preference was clearly seen the day after election day with markets up close to 3% despite not knowing who would become our nation's next President.
Technology and health care stocks were the biggest benefactors post-election day as those two sectors were expected to be hit the hardest if democrats came away with a sweep. This was a welcome sign given these two sectors are among our most favored investment themes long-term.
Even if the Democrats were to take control of the white house and congress, we believe the negative economic impact of tax hikes would be largely offset by the strength of our current economic recovery and additional stimulus. Manufacturing statistics we monitor are well in excess of expectations, driven in large part by renewed demand from consumers coupled with extremely low inventory levels across a wide variety of industries. We believe this restocking of America will act as a tailwind for the economy in 2021, pushing earnings growth above 20% next year.
Taking a step back, an analysis of stock market returns during past presidential cycles shows that on average stocks have risen no matter who controls the white house. While this backwards-looking analysis cannot predict whether stocks will be higher four years from now, it does lend support to our opinion that changes in political power only affect results on the margin and rarely ever change the course of the market or the economy. We firmly believe this time is no different.
Expect continued updates from the Merit investment team as this situation develops. We sincerely appreciate your trust in our team and investment process. Please reach out to our team should you have any questions regarding our views of the markets or our strategy.