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1st Quarter Market Commentary

A "TO DO" List for 2021

As we all reflect on the triumphs and tragedies of 2020, it is time to focus on what we must do moving forward. The vaccines are being deployed, so we may honestly expect the terrible COVID-19 pandemic will soon be behind us.

What is so surprising is the diversity of experience we have witnessed over the last 11 months! Some have suffered, some have prospered, and some did not survive. Most of us know of some friends, or acquaintances who may have lost a loved one. Our own family suffered the loss of our matriarch, Nancy. She was 90. She had the virus early in the year. But we believe she is gone too soon. We feel a tremendous loss. Like many, we can’t even gather to celebrate her amazing life! As you might expect, given the circumstances, a memorial is being planned for November or December 2021.

So, while many people world-wide have suffered job loss, shutting down of their business, food insecurity and more, some sectors of the economy have flourished! The stock market ended the year near all-time highs. Many companies in tech, work-from-home services, delivery, e-commerce, real estate sales/escrows/lenders/title insurance, car sales, health care services, PPE manufacturers, as well as makers of toilet paper, and sanitizer have enjoyed booming business. One of our clients is a real estate firm with over 300 agents. I was told by the owner that this was their biggest year ever by nearly double any previous year!

It is hard for me to fathom how so many people may be suffering desperate times, burning up of lifetime savings and facing personal health issues and loss of loved ones. While at the same time, so many people have continued to work, do transactions, build houses and shopping centers, sell more stuff and rake in excessive revenue and income.

So, what lies ahead in 2021?

Initially, the watchword is PATIENCE. The wide-spread deployment of the vaccines cannot come soon enough. It will come, but we have to wait our turn. Wait for the second shot. And wait for the messenger RNA to do its job by building up our immune system. During the first half of the year, we may see much of the same suffering and prosperity that characterized 2020. In such an environment it would be easy to hunker down, become depressed and miss the many opportunities that 2021 will bring. With loss, no one wants to take on risk. The natural focus is safety, perhaps to a fault. So, I would like to offer four insights for financial and mental success in the coming year.

1.  Recognize that living every day involves risk.

We can never avoid risk completely. We must be smart about mitigation. This is not a time to be foolhardy or throw caution to the wind. But investing in new technology, embracing work-from-home strategies, learning about new ways to shop, communicate and do business, will likely bring huge benefits in 2021 and beyond. Going forward we all need to become “early adopters.” The world is moving into a new era. Surely the seeds of change were with us before the pandemic. But, COVID has accelerated many new trends to create a new reality. Go with it. Step up and don’t be afraid to change.

What many see as very risky enterprises are coming into our lives, ready or not. For example, 2021 will likely see more self-driving cars, more artificial intelligence, acceptance of transportation as a service (TaaS), building the foundations for Urban Air Mobility (UAB) where we will move above the streets in vertical taxi services. We will also see more cyber-crime, more cameras, and more social media – with both its wonderful connections and its terrible trolls.

Therefore, accept the risk all this ‘newness’ brings. Wade into it, perhaps cautiously. But many new technologies and experiences await. Choose to go forward sooner rather than later. Go boldly into 2021.

2.  Focus on what’s working – Take note.

You may remember when Tesla first introduced an all-electric vehicle in 2008. Other companies had all-electric cars. Many people regarded all electric vehicles as a fad. Some saw it as impractical – not enough range until the Tesla’s Roadster debuted with 245 miles. Critics cried, there were not enough charging stations, not enough of a market. Yet today every major car company has a competing electric car. From an investment standpoint, you could not have done much better than to buy Tesla on January 2, 2020 at 86.05 a share. As of December 18, 2020, the stock price closed at 695.00 a share! That represents over an 8-fold increase! – An 800% gain.

So, what I suggest is look around, pay attention. Some new technologies, businesses, strategies, and business models are working. People are adopting those products and services that make their life easier, more convenient, and productive. You want to get on-board. It’s how you will make money as an investor. Or, if you hesitate too long, you may be left behind.

3.  Stay mentally healthy – be grateful for the good, despite any pain and suffering you may see or experience personally.

2021 may be a very tough year. Many people will continue to lose their businesses, say good-bye to loved ones from a distance, and struggle to eat and thrive. We all need to exercise our resilience muscles. This is not a year for the faint of heart. So be strong! Lend a hand when you are able. Moreover, accept the help you need to get through it all. Many people have never had to ask for help in their entire life! This time it’s different. Learn to ask for help, go to the food bank, find someone to give you a break – a mental health day.

It seems, 2021 is definitely the year to come together. As a nation, we need it. We must not let our different opinions or viewpoints divide us. Learn to lower your stress. Take time to breathe. Go for a walk. Get a hug from someone in your bubble. And talk to your friends, even though you may not agree on some topics. We must be responsible for our own mental health as well as our physical and financial health.

4.  Work with a financial advisor.

It may seem simple, but a good financial advisor may be your most important relationship as we emerge from this terrible pandemic. Why do I say that? Is it just because HARRIS & ASSOCIATES is an advisory firm? Not at all. By working with an advisor, you have several advantages others lack. First, realize this key fact: every wealthy person has one or more important financial advisors in their life. If you need one, or you are not happy with the one you are currently working with, step up and get started with an advisor who will transform your future.

A good advisor will analyze our resources – Take a look at all your many resources. It may include investment money, a business, income, real estate, pensions, Social Security, annuity assets, job benefits, family resources and more. The point is to use what you have, to get where you want to go!

A good advisor will help you focus your goals – clarify what you can achieve and map out a reasonable strategy to get there. Your advisor may show you opportunities you may not notice. Trustworthy advisors monitor the stock market and manage your investments. They help reduce taxes and give you more money to spend when you need it most.

Choose someone with experience, expertise who is laser focused on your best interests. A good advisor may protect you from loss and help you avoid unnecessary risk. Markets will fluctuate, but integrity does not. Your investments may go up and down with the daily news. But your advisor may help you stop a down trend, then get you back in the market when markets begin to advance again.

Finally, a good advisor will help you rest easy. A trustworthy advisor may help you have confidence you are on the right path. With a good advisor you may see your goals become your reality.  Yet, not all advisors are good advisors. There are all kinds, just like any profession. So, look for an advisor who has the performance, the service and the responsiveness you require. You should have a fiduciary, one who does what is best for clients every time, all the time. You should expect nothing less than concierge service. Seek an advisor who takes the time to explain products and strategies, helping you grow. If you look carefully, you may find an advisor who will partner with you in your success. 

We strive to be that very good advisor for you. So, tell your friends and keep in touch. Lean into what we can do for you. By doing so you can expect to thrive and live an abundant and resilient 2021!

Sincerely,

 

 

David L. Harris, PhD, ChFC, CFP®
Wealth Advisor 
HARRIS & ASSOCIATES

A Registered Investment Adivsor

(310) 318-3700
www.harrisadvisory.com

IMPORTANT DISCLOSURES:

Harris & Associates is a Registered Investment Adviser. This commentary is solely for informational purposes and not a solicitation to invest. The results reflect the deduction of fees and the reinvestment of dividends and other earnings. Advisory services are only offered to clients or prospective clients where Harris & Associates and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. The performance is based on the strategy described above involving selling equity assets, gathering cash and hedging portfolios with inverse ETFs in an effort to combat sliding markets. Investing involves risk and possible loss of principal capital. No advice may be rendered by Harris & Associates unless a client service agreement is in place. More information about Harris & Associates including our investment advisory fees are described in Form ADV Part 2 available on the Investment Adviser Public Disclosure website. Please contact a financial advisory professional before making any investment decisions.

[If you would like a confidential review of your portfolio, call for an appointment, or book your meeting on-line at www.harrisadvisory.com. It is always free and without obligation.]