Economic Insights - December 2020

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What is the outlook for the economy?  We’ll give you the insights and analysis you need to make better decisions, so you can make better profits.

2020 was one of history’s most tumultuous years.  Yet, for investors with a long-term vision, it was by far the best year we’ve seen in the 21st century.

The total return on the S&P 500 was just over 18 percent.  Meanwhile, the PARE-5 strategy in which the Trends and Business Briefings editors invest was up 76 percent through December 22. (If you’d like to find out more about PARE-5, call 1-630-399-1319 or email carolyn.thur@ampf.com)

As you’ll recall, the Trends editors called the exact bottom of the COVID-driven crash in a video Town Hall on March 22 and we explained how smart investors could use logic and historical evidence to embrace the economic whirlwind, rather than running away from it.

After the market bottomed on March 23, we learned that over 70 percent of Baby Boomer investors panicked and sold into the crash, missing one of the greatest booms in investment history.

Today, we are at another inflection point where most investors are very nervous.  The market is sitting at new all-time highs and the average investor is waiting for the bottom to fall out.

Given this backdrop, this seems like a great to let every member of the “Trends family” in on our answer to one key question, again based on logic and historical precedence: “What lies ahead in 2021 and beyond?”

To summarize, there are five key things you need to know:

  1. The secular bull market that started in 2013 is driven by a technology revolution and it will last through the next decade.
  2. The cyclical bull market (which started in late March) is super-charged by liquidity and it could well last another year, rising to 4500 on the S&P 500.
  3. Carefully selected growth stocks will substantially outperform the indexes as they did in 2020; so, in the first quarter, buy the dips.
  4. Someday value stocks will make a come-back, but it won’t be in 2021. And,
  5. Forget about fixed-income investments; as long as we have negative real interest rates the only thing worse than bonds is cash.

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