If you have been reading the market headlines this week, Gamestop and AMC's meteoric stock price increases have been in the news as the "revenge of retail" makes it's mark on the hedge fund industry. This incident has rattled the markets along with a more circumspect re-examination of expectations for a second half 2021 economic recovery given the new South Africa COVID-19 variant and delays in the vaccination supply. The dizzying rallies in Gamestop alongside new market highs and souring expectations has given pause for thought. Have the markets come too far, too soon!
In one of our earlier articles, we outlined why we think that 2021 could be a strong year for the market based on the massive stimulus that has been injected into the economy coupled with close to zero interest rates. We also noted that delays with the vaccination roll out and potential mutations could prolong the "COVID Blues" and delay an expected economic recovery. There are other potential issues such as an escalation of economic tensions with China. These "uncertainties" provide ample fodder for market corrections in a likely continuation of the bull market.
One Professor, Jeremy Siegel, author of "Stocks for the long run" shares a similar ooutlook and is not blinking an eye in the midst of this market correction, standing firm with his latest prediction that the Dow will reach at least 35,000 in 2021.
Smart institutional money was on balance beginning to exit the market a month or so ago and the current news story provides the context for a continued market correction.
Portfolio and wealth management looks at the macro economic picture in a diversifed risk adjusted manner. There is re-balancing of portfolios as needed but in general the ups and downs of the market continue in a trendline that is UP over the long term.
A solid portfolio is well diversified across the strongest companies and sectors in a mix of stocks, bonds and alternative assets with a proper accounting for clients annual income needs, both pre and post retirement. Unless you have a passion and strong interest in wealth management and investing with years of experience, you will be much better served employing the services of a wealth management company that can do the heavy lifting for and with you.
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