2021 US Political Landscape Investment Commentary

A&I Financial Services > Blog > 2021 US Political Landscape Investment Commentary

Read this Periscope to learn what today’s politics might mean for our investments and also to get the short, (and long if you like), version of our investment and economic commentary.

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Today’s Political Landscape
Words cannot convey our feelings about recent events in Washington DC. For many members of our team, the emotions are running high. Perhaps you understand what we are feeling and can relate?

There are things we can control and things we cannot. Clearly, the situation in Washington DC is uncertain. So, what does this mean for your unique financial plan?

Check out our thoughts from a recent Lunch & Learn event where we outline the importance of the President and Congress to our long-term, real-life financial plans.

2021 Investment Market Outlook

 

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Our 2021 Investment Commentary
We just finished a year in which the equity markets did well in spite of the headlines. I hope you found a way to stay confident during 2020, and that you hold on to that confidence in 2021.

For our more detailed investment commentary, click here.

2021 Investment Markets Outlook
Equity markets, by and large, closed the year 2020 at all-time highs, and the US equities lead most of the world. We suffered incredible volatility and stress in 2020.

We have many reasons for optimism. The pandemic, according to many experts, including McKinsey and Company, will come to a functional end in 2020. Monetary policy from the US Federal reserve and other central banks promotes growth. Fiscal policy of the US government has been, and looks to continue to be, supportive of the economy.

Two Investment Risks in 2021
For these reasons, the outlook for US and global equities is good. The US dollar is low compared to its peers, at least most recently. Our research partner, Litman Gregory, predicts it might go lower—but not enough to cause worry. Fixed-income investments have a mostly poor outlook because rates are very low; so we are generally investing in non-core fixed income investments. And finally, the outlook for alternative investments is fairly good in a low-interest rate, volatile world.
The risks to our optimistic outlook are two-fold. First, the common but unfortunate byproduct of growth-oriented fiscal (government spending) and monetary (Federal Reserve) policies is inflation. We may see inflation come back, and sometimes that happens quickly and is hard to tame. The second big threat is the geopolitical landscape. For example, the policies of the Chinese government have an increasingly important impact on the prices of equities around the world. Both of these risks are largely outside of our control.

We encourage you to read the entire 15 page investment commentary and call your financial advisor to discuss what you think, what we think is important for your situation, and to learn if there is anything different you ought to be doing.

Download the Full Investment Commentary

About the author

Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.