Our 2021 Midyear Market Update

By Brett Gottlieb

If 2020 taught us anything, it’s that we can’t predict the future and we have less control than we thought. We had to adapt to significant changes to basic aspects of life, like work, interactions with loved ones, and educating our children. With those experiences and the lessons learned fresh in our minds, most of us entered 2021 with a bit of apprehension of what might be around the corner.

Although we didn’t know what to expect, we’re now halfway through the year and on our way to moving back to some sort of normal routine. This 2021 midpoint is the perfect time to take stock of what’s happened so far in 2021 as we continue recovering—emotionally and economically—from the pandemic.

Stock Market Performance

As vaccine rollouts have allowed many businesses to return to normal, some experts believe we may be entering a booming economy.[1] Stock market performance has been mildly volatile in the first half of this year with an overall trend toward growth. The S&P 500 reached its highest level this year on May 7, with a year-to-date return of 14% as of June 4.[2] The Dow Jones has also shown overall growth this year and is up 15% as of June 4.[3]

Meanwhile, the NASDAQ has shown greater volatility with a yearly low of -2.17% in early March, up to 9.7% at the end of April, and ending at 8.79% as of June 4.[4] Many experts have warned that while they are optimistic about market performance in 2021, that performance will likely be riddled with volatility throughout 2021 and in the coming years.[5]

A Shaky Return To Normal Employment Levels

It has been generally expected that as businesses reopen to full capacity, the number of unemployment claims and levels of unemployment will return to normal. As many of us have seen in the news, however, this is currently not the case.[6] Along with other businesses in the hospitality industry, restaurants are especially struggling to replace their workers and remain understaffed in the face of increasing demand from consumers.

Some commentators believe workers are reluctant to return to work because of continued unemployment assistance from federal and state governments. Others argue that many workers are unable to return to work yet because they are still wary of the coronavirus, are unable to find affordable childcare, or now have the time to look for more stable, higher-paying work outside of the hospitality industry.

Whatever the reason for the worker shortage, worker benefits and wages may undergo drastic changes in 2021 and beyond as the economy returns to normal. In any case, getting workers back into the workforce remains a key component of the U.S. recovery plan.

Interest Rates & The Federal Reserve

Interest rates continue to remain low, as the Federal Reserve has promised. In an effort to encourage consumers to keep borrowing, the Fed has kept interest rates near zero since the onset of the pandemic. They have stated they will likely not raise rates again until 2023, when it is more likely that inflation rates will reach desired targets.[7]

For now, the near-zero interest rates may be attracting first-time homebuyers who have been able to weather the economic pressures from the pandemic. However, home prices have surged 13.2% over the past year,[8] igniting some fears that a housing bubble may be looming.

How Should You Respond?

We’ve always said that market performance is impossible to predict with accuracy. As 2020 and 2021 have taught us, market performance may be impossible to predict at all. The truth is, we never know what lies ahead, but that shouldn’t prevent us from taking the steps to protect ourselves and pursue financial freedom.

Now more than ever, it’s important to know you’re making the financial decisions that are moving you toward your goals. At Comprehensive Advisor, we specialize in helping our clients reach financial independence using sound financial strategies that align your day-to-day decisions with your long-term financial plan. If you’d like to see how we can help you, I invite you to give us a call at (760) 813-2125 or email us at info@ComprehensiveAdvisor.com.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees in Business Administration and Economics. Brett is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

With a combined experience of over three decades in the financial services industry, our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial solutions for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a retirement road map to help ensure their assets are protected and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Comprehensive Advisor, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Comprehensive Advisor are not affiliated companies. C.A. Financial & Insurance Services, CA Ins. Lic. #6000262. This material is intended to provide general information and is believed to be reliable, but accuracy and completeness cannot be guaranteed. Neither the firm nor its representatives may give tax or legal advice. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc. generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. 944298 – 6/2021

[1] https://www.cnbc.com/2021/04/09/the-economy-is-on-the-cusp-of-a-major-boom-and-economists-believe-it-could-last.html

[2] https://www.google.com/finance/quote/.INX:INDEXSP?sa=X&ved=2ahUKEwjI5a-z8oDxAhWbXc0KHQ2PCWYQ3ecFMAB6BAgiEBo&window=YTD

[3] https://www.google.com/finance/quote/.DJI:INDEXDJX?window=YTD

[4] https://www.google.com/finance/quote/.IXIC:INDEXNASDAQ?window=YTD

[5] https://www.morganstanley.com/ideas/stock-market-outlook-2021

[6] https://thehill.com/policy/finance/economy/556235-chamber-of-commerce-worker-shortage-crisis-deepening

[7] https://apnews.com/article/fed-expects-key-rates-near-zero-through-2023-9b9a335a1ce05d69fc97a1d6197371ab#:~:text=WASHINGTON%20(AP)%20%E2%80%94%20The%20Federal,markets%20about%20potentially%20higher%20inflation

[8]https://www.carsonwealth.com/insights/market-commentary/market-commentary-home-prices-surge-over-previous-year-disposable-income-dips/

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