The pace of innovation in our economy today is incredible. From advances in health care like gene therapies and vaccines, to robotics, artificial intelligence, and machine learning, to electric vehicles and energy storage, to advances in satellite and space technology, and so much more. Interest rates are near all-time lows, and steps are being taken to stimulate the economy by both the Federal Reserve Bank and Congress. Last year, Congress passed a $2 trillion stimulus package in March, followed by a $900 billion relief program in December, and is now debating another stimulus bill, with a price tag likely to be over a trillion. All of that money has been taking up the slack caused by COVID shutdowns, keeping our economy going, and pushing stock prices higher. We see higher amounts than ever sitting in money market accounts and cash while the rates of return on those investments are at historical lows. It would appear that many investors are still cautious to invest while we continue to battle the challenges of COVID.
With the hope of vaccine availability, fully reopening our economy, and getting “back to normal”, there is great cause for optimism. At the same time, risks remain. Persistent high unemployment, new strains of COVID, high levels of government and corporate debt, higher stock prices, and an increase in speculative fervor in some areas of the market create concern. Interest rates are so low that bonds (traditionally safe investments) provide low returns and higher than normal risks because if interest rates rise rapidly, bond values could fall. This makes the secure portion of portfolios a bit less safe.
Ultimately, what drives the long-run value of the companies we own in the stock portion of our portfolio is their earnings. And so far, most companies are reporting earnings for Q4, 2020 that are in-line with or stronger than the market expected. Over the last year, U.S. households have paid down debt, with debt payments as a percentage of disposable income dropping from 13.2% in 2008 to 9.1% at the end of last year. The Consumer Confidence Index for January improved from 87.1 to 89.3. These factors could support faster consumer spending growth in the future.
We continue emphasize the importance of discipline in our approach to money management. In the same way that we added risk, buying stocks when prices were falling early last year in the reaction to COVID news, we are reducing risk a bit now by rebalancing and taking some profits from higher priced areas of portfolios (areas that have grown the most), following the surge in stock prices we have seen.
Please feel free to reach out to us if you'd like to discuss your investments outside of our normally scheduled review.
Tax Update
Tax season is right around the corner! Here is the schedule of when we expect tax statements for you investments to be available:
Milestone News
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Milestone Hires Ryan Boyington |
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As a firm, we are investing in our team to better serve you. This past October, we hired Ryan Boyington, a Muhlenberg College grad with 7 years of experience in the financial services industry, including roles as a financial advisor, a trading analyst, and an institutional relationship manager. Ryan is a sports fan and BBQ pitmaster, and lives in Breinigsville with his wife Joanna, a Physician’s Assistant, and their dog Boomer. We are excited to have Ryan on our team and look forward to introducing him to you! 
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Reta's granddaughter Lark getting introduced to snow!
Justin's daughters (Ellie and Emma) get a workout trying to walk through over 2 feet!
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