Scott Kahan's 2021 Market Outlook: It's Not Rocket Science
We all got whipsawed in 2020. What do you tell your clients?
The first thing I tell clients – if you didn’t realized this by now, 2020 was the perfect example of why people say you can’t time the markets. When the market crashed last March, some people had a strong urge to want to pull back on their exposure to equities, trash their plans, and go to cash. I did have some clients who saw it as a buying opportunity and increased their exposure but most people didn’t trust the market.
2020 showed us in dramatic fashion that the market is forward looking and it rebounded during the depths of the pandemic when things looked very bleak. The thinking then was that the economy was strong when we went into the pandemic and that would carry us to the other side.
Now with a new president the expectation is that we are going to have infrastructure spending which will create jobs. Vaccines are a positive which will allow people to get back to normal life including travel and restaurants and entertainment which is healthy for the economy. And why the markets can do well in 2021.
So what do we do now?
The market is strong now and there are many positives ahead. But that doesn’t mean we can’t have a correction. We are overdue for a 10-15% correction. Could be 20%. The problem is that we don’t know when the correction will come. And we could see more gains before we get a correction. Which gets back to the issue of trying to time the market.
This is why it’s important for people to have their asset allocation models. If they do, they are likely to be overweight stocks, and if you are, it is a good time to rebalance your portfolio and take some profits.
To read the full article visit: whattododigital.com