So here we are yet again. A year for the record books to be sure. We’ve come from a time when clients that listened to all of the headlines decided to NOT open their accounts to see their balances – particularly in the Spring.  But then, amazingly enough, when they did actually look at their accounts, most were pleasantly surprised!

Yes, I’m seeing the headlines this week that state the markets have run too far too fast and it’s time to sell and run for cover. And my first point here is don’t follow the rants of the media. The headlines want to scare the Hxxx out of you so you’ll read their articles. Their ratings draw advertising- and of course that’s who they truly care about; the advertisers and their pocketbooks. But seeing the perma-bears week after week can be a bit draining. I admit I look at headlines (from several newspapers each morning) but generally refuse to read or watch much of anything past the headlines. I believe that one can’t know what to believe as the line between fact and agenda are usually pretty fuzzy. If I don’t read the ‘current’ news I can be more objective when I read the stock charts.

(In my opinion) the market is going higher. It’s perhaps hard to convince yourself that stocks can go any further up, (and yes, I know that the S&P is up from 2191 at the low in March to 3668 at Thursday’s close). That looks to me like about a 65% gain in 8 months – definitely way too much, right? Well yes, but these are unusual times. Shown on the chart is a comparison of a US growth index in red vs a US value index in green for this calendar year.

(~Source: FastTrack Software.)

So, for clients, we espoused owning growth since mid-April, and then as the strength of growth increased, owning more growth. You’ll note that growth is getting stronger, as the lower graph shows growth increasing its strength over value.

Today we have a solid and improving economic environment (in spite of the Coronavirus), and historically incredibly low interest rates that SHOULD (my word) send stock valuations soaring.

We will stick with our system of finding investments with a funneling method. Which country is strongest? Then are the large companies or smaller companies doing better? Then is it growth or value that’s winning the race? And finally, within the growth areas, which are the sectors that are leading — is it healthcare, technology, communications? Which? By staying with the leading sectors, we expect (over time, not necessarily every month or week!) to compare favorably with the market returns.

We also note that there is currently over $6 Trillion in money market funds earning very close to nothing and believe that many of those cash holders are feeling that they are missing out on a good thing. And so, we (especially I) expect a continuation of the current bull market. To repeat- it won’t be a straight line, but the direction looks pretty clear. Here’s to a prosperous 2021!

Ron’s Market Minute – The Trends

As always, I admit that I could be wrong.

Stocks could certainly march merrily higher into the New Year, and beyond, based on the eventual vaccines. It’s important to remember at times like this that the market is not a one-way street — it comes complete with pullbacks and corrections all the time. Still, here’s a chart of the trends. And in all timeframes stocks are in a broad uptrend, led by the aggressive sectors. 

~Chart Source: OnTrack Report

Most of you are undoubtedly experiencing nice market returns. For those on the side ‘waiting for a better time to invest’, you actually might want to keep waiting, and hope that the bears are right- that there will be a nice pullback when prices get cheaper. But then, it might be a long wait. 

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

LFS-3367241-121120

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners for use with advisory clients only and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw@denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

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*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.

Ron Denk is a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Mr. Denk is also an Advisory Representative offering services through Denk Strategic Wealth Partners, a Registered Investment Advisor. Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation.

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Past performance is not a guarantee of future returns.