2021- What to expect in the coming year

2021- What to expect in the coming year

Hello everyone and welcome back to the Boodle blog. We hope you are safe & well and looking forward to a transitional year as the democrats assume control of many levers of government power. People have often commented that if the Democrats control “everything” then they will sell their portfolio’s and move to cash. We have heard this exact same strategy for if the Republicans controlled everything.
Here at Boodle, we never let politics cloud our judgement on what will happen to the stock market, and ultimately, our portfolios.
We understand the anxiety involved and we hope that we can tap that fear down a bit so that we can make prudent moves that will payoff in the form of more gains in our portfolios. So, with that being said, let’s look toward 2021 and see if we can apply our years of stock market experience to keep our gains flowing like they did in 2020.
What catches our eye first is the amount of liquidity that is flowing into the economy via the Federal Reserve. The Fed has been purchasing $80 billion in Treasuries monthly, and $40 billion of mortgage-backed securities monthly also. This liquidity is like the “fuel” that helps keep the U.S. economy humming along.
In addition to the Fed’s monetary policy, let’s not forget the $900 billion that Congress just pumped into the economy, much of it in the form of $600 checks to many households across America. Congress also allocated $82 billion for local educational institutions and $28 billion for COVID vaccine distribution. There is money for various other programs, but you get the idea – more money into the economy. With a new administration coming in, we expect this flow of money to continue for the foreseeable future. Speaking of COVID-19, we expect that as more Americans get vaccinated, the more the economy will open, and people can get back to life as it was, or at least, as close as possible.
So we are anticipating gains in our portfolios for 2021 and our forecast falls in the range of an 8%- 10% gain, possibly slightly more. We also anticipate some “pullbacks”, that on a short-term basis, could be very volatile. Our approach for 2021 mirrors our approach that we executed in 2020 – dollar cost average new money into the market. Stick to your allocation based on your own personal tolerance for risk and continue to follow Boodle for all things financial. If your membership at Boodle is due, please go to the “CONTACT US” page so that you do not experience a break in service. 2021 promises to be a year that you do not want to miss a moment staying up to date on all things financial here at Boodle. Have a great month, and we will see you back here in February. Thank you and stay safe.

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Robinhood - Taking from the poor and giving to the rich

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The Year that was - 2020, a look back