On today's episode of the Wiser Roundtable Podcast, Casey and Brad provide Q2 2021 market commentary. They discuss how portfolios performed in Q2 2021, how they have performed historically and how we predict they will perform throughout the rest of 2021.
Casey and Brad begin the podcast by discussing the S&P 500 being up over 14% at the midway point, leaving many surprised by the rapid acceleration. While it is unclear as to whether or not this trend will continue with high-speed momentum, those who were already invested have been well rewarded for keeping their money in the market.
Sometimes, what people don’t want to invest in this year, they might want to invest in the following year. A prime example of this are Real Estate and Energy stocks, up 21% and 42%, respectively at the 6-month mark. Therefore, it is important to invest in the index itself (S&P 500 ETF) – to ensure that you are always invested in one or more of the sectors that’s doing the best.
Chasing returns and holding off on investing until the numbers are high robs the investor of their ability to capitalize on the surge that happens early in the movement itself. Similarly, if something isn’t performing well, individuals often panic and sell at the bottom. To maximize potential, you should aim to invest in broad indexes and focus on long-term.
Q2 2021 saw the S&P up 8% (39% YTD) and Small Caps up 5% (23% YTD). In the past three months, ten of the eleven sectors in the S&P 500 were positive. One important shift to note is the narrowing breadth of the market. During Q2 2021, the number of issues from the S&P 500 posting positive gains went from 410 to 218.
Projections from Vanguard bolster the notion that much like the slowdown in number of companies posting positive gains over the course of Q2 2021, we anticipate more of a flat line when it comes to overall market performance for the remainder of 2021. P/E ratios are up, and corporations are expected to be able to pay those earnings, so new money has continued to enter the market. Bonds are experiencing some minor stress but are still a great way to mitigate risk and volatility. Rapid inflation is also making headlines because of its effect on supply chains.
With 9.2 million jobs open and only 6.1 million people to fill them, employees collecting stimulus checks must make the decision to return to work or continue to rely on the Federal Government for compensation. To offset the aftermath of the pandemic and the resulting inflation, the Fed is considering raising interest rates in 2023 instead of 2024.
Being out of the market will usually be more costly than being in it. The notion that the 60/40 portfolio is no longer a smart choice simply isn’t supported by fact. There will always be volatility in a portfolio, so we have to be careful not to become too conservative when there is apparent upheaval. A balanced portfolio will continually gain value over time. It’s important to remember that when there is extreme volatility, you must keep a level head and focus on the long-term.
0:53 Q2 2021 Overview
6:33 2021 Market Projections
20:53 Importance of a Balanced Portfolio
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