Trust Company’s Economic Outlook For 2021
Posted on January 28, 2021
The Sanibel Captiva Trust Company and its divisions, The Naples Trust Company and The Tampa Bay Trust Company all conducted their annual Economic Outlook virtual programs in their markets from Tampa Bay to Marco Island highlighting the major points of the economy across domestic and global markets. More than 200 households participated in the webinars.
Senior Portfolio Manager Ed Ciskowski, CFA, said, “The markets ended on a strong note in 2020 despite COVID-19 impact on economic growth.” GDP, the value of goods and services in the US dropped 31% in March due to the coronavirus shutdown but recovered swiftly to +33%. Impact on unemployment was 15% after a historic low at under 3%. It is now meaningfully improved.
Senior Portfolio Manager Ed Ciskowski, CFA, said, “The markets ended on a strong note in 2020 despite COVID-19 impact on economic growth.” GDP, the value of goods and services in the US dropped 31% in the second quarter due to the coronavirus shutdown but recovered swiftly rising by 33% during the third quarter. Unemployment rose to nearly 15% over the same time period before meaningfully improving by year end.
The S&P 500 closed up 18.5% at year-end and the Dow up 9.7%, while the Russell 1000 Growth was up 38.5% and Russell 1000 Value up 3%. Small Cap stocks were up 20% in the US and foreign stocks up 8%. Emerging markets up 18% and bonds at 8%. Ciskowski reminded investors, “Market timing is dangerous as stock markets react quickly and aggressively during periods of volatility. Diversification matters, so buy good quality companies and hold them long term.”
Ian Breusch, CFA, Chief Financial Officer of The Trust Company said, “The US economy will continue to rebound through 2021 and beyond. We remain optimistic regarding stocks for the foreseeable future because, of 1) broad-based economic recovery and continued improvement in the labor market, 2) significant fiscal and monetary stimulus, and 3) low interest rates remain a factor.”
Breusch went on to say that if stocks do sell off a bit in 2021, the company will be ready to buy on behalf of client portfolios. Lofty current valuations may weigh on stock market performance or create additional volatility through the year, particularly among growth stocks. Traditional valuation metrics still matter. Longer-term expectations for US stocks also remain favorable with a projected 5 – 7% annual return. “As we see it, there is still more risk in bonds vs. investments at this time” said Breusch.
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