December 2020
Market Update

In keeping with the theme of breaking records this year, markets finished November at all-time highs for several of the indexes with the DOW having its best monthly performance since 1987 and its best November since 1928, climbing 11.8%.  The S&P rallied over 10% for the month but was overshadowed by returns for small company stocks which booked the winning returns for the month, up over 14%.  A pretty astonishing result for a month filled with anxiety (if our phone calls into the office were any indication at all!) and volatility due to elections and escalating virus cases.

Despite some early volatility to start the month, markets settled down and strengthened on the discussions about another round of stimulus, as well as the very welcome news of not one, but two, vaccines which appear to have very high efficacy rates against the virus.  The importance of these two items cannot be understated.

Can December build off that optimism and put the tassel on the stocking cap for our year-end Santa Claus rally?

If we can get another round of stimulus during the lame duck session – difficult, but not impossible – that will certainly support further market gains this month.   Equally supportive will be approval by the FDA for vaccines from Pfizer and Moderna.  Pfizer is first up with a December 10 meeting with the FDA, and Moderna just this week filed for early approval as well.  The logistics of getting these vaccines out into the country may prove challenging.  Both vaccines requires sub zero temperatures for maintenance and not longer than 5 days refrigerated once available for use, and Pfizer’s approach requires two shots 28 days apart.  For more information on how this new vaccine technology works, see our graphic of the month.  There is general consensus on who gets the vaccines first and the US military is charged with delivery and storage logistics, so we may see our first vaccinations before year end.  A very welcome finish to a very unwelcome year.

In your portfolios here, our models briefly moved some of the stock exposure to cash as volatility picked up going into election week, but quickly returned to fully invested as investors’ focus turned from the election to vaccines and further stimulus.  Our bond portfolio remained fully invested and we have seen our rotation strategies pick up on the trend in small company stocks and even some international.

This is the final commentary for 2020.  We know that simply turning the page on the calendar will not make all of these challenges we have faced this year disappear, but there is some relief in knowing we have made progress and we will start with a clean slate for 2021.  Thank you for your patience, your communication, and your faith in your team here to guide you through this year.

From our family to yours, please have the very best and very blessed holiday season.

If you have questions, please contact us.

FINANCIAL PLANNING
COLLEGE AND TAX PLANNING
401(k) ALLOCATION
GRAPHIC OF THE MONTH

To download the December 2020 Newsletter: CLICK HERE