Mid-Year Market Update

It’s already July and we’re midway through 2021 so we just had a great call with our portfolio manager, Guy to talk about where the market is headed. 


We’ve hit some new highs since last year when we saw some very quick market lows. The market has rebounded quickly and we’ve hit some highs this year.  


The question on everyone’s mind is, “Where is it going?” 


We’ve had a volatile couple of days, summer can sometimes be slower, and so on this call, we did a nice update with Guy talking about where we see the market going, where he sees the opportunity and moving forward, why it’s important to have both the human element and technology element when it comes to someone manage your money. 


To really be successful you can’t have all robo investing nor all human and not technology.


There’s got to be an element of both and Guy is going to share that with you, along with some of the opportunities that are out there and some things that you want to watch for, especially if you have a portfolio of mutual funds and what to do with some of the things are to be cautious for when it comes to tax planning with your accounts. 



We’re excited to have our First Friday Live here. We’ve been through two quarters of the year and now we’re looking forward to seeing where we should be going from here? 


Where’s The Market Heading?


Stocks have done well over the past year, and their growth has followed along with the growth of the companies. This means as of now, there is still room for growth as the market is not overvalued. 


Last year the growth stocks led the way, this year the value stocks are performing better.


However, we can’t predict what’s going to happen and when that changes. 


It’s always important to remember that there is downside risk, and protecting against big losses is the key to successful investing. 


Managing risk-adjusted returns is one way we address this.


Mutual Fund Cautions


Mutual funds and ETFs are pooled investments and they have to manage based on their prospectus. That means that if you have growth-based funds, you cannot buy value-based stocks. They cannot make the shift to capture opportunities in the market. 


Also, there is no management for risk-adjusted principles in place. So while you feel like you are secure because you are in a big fund, you might actually be opening yourself to more downside risks.


The other thing that you open yourself up when you have everything in mutual funds has to do with taxes. This is especially if it’s like a non-qualified account, meaning it’s not your IRA or a Roth, it’s just money that you have saved. 


You can end up paying tax consequences because of other people’s actions. You miss the opportunities to take some of those losses to offset gains and you have to be tax-efficient when you’re in the pooled structure.


Mutual funds and ETFs can be great for the smaller investors, under 70k to gain diversity that is hard to build out with individual stocks in smaller accounts. But they are managing it towards that prospectus, not to what you want and what’s really happening in the market and in the economy. 


Bonds – Risks, Opportunities, Alternatives


The same is true with the bond funds. Where the rates are there are fewer opportunities in some of the bonds for the gains. 


But more important than that, or just as important, is if the rates go up and you’re in a bunch of bond funds, you could actually lose in your bonds. 


Some people look at their portfolio and think, “Oh well, I’m safe because I have so much in bonds.”  


There’s a lot of opportunity in the bond market because it’s so big. But if you’re just stuck in the funds, you’re probably missing out on some of that, and you’re actually taking on a little bit more risk when rates go up.  


And they can’t really go much lower, right?


We’ve previously had conversations about Index Annuities and how they can be used as a bond alternative. (You can view the full video and blog here.) 


The most important thing is not just diversification, it is correlation.


So it’s really important to look at correlation and how things work. Make sure that you’re avoiding those big losses, but also taking the opportunity to get some of the gains in your account too. 


How do you know how this applies to you?


Let us do a review. If we find that what you have is good then it will be obvious and we’ll tell you that. However, if it’s not, if there are any problems at all, then you deserve to know what and why.


Either way, you’re going to get more confidence. If it’s already good, you’ll have the confidence to stay put, and if something isn’t working then you’ll have the confidence to understand why and understand what you need to do.

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