What to Expect This Year

What to Expect in 2021

The chaos of 2020 took its toll on the finances of countless Americans and forced them to reconsider or adjust long-term plans. And, just as we hoped to turn the page to a calmer financial climate, the early weeks of 2021 brought more uncertainty, with the GameStop “short squeeze” controversy grabbing headlines in a volatile stock market.

Thankfully, as is often the case, headlines don’t tell the whole story. And, if you’re hoping for a more normal year in 2021—if not necessarily “back to normal”—there’s still a lot to be hopeful about.

COVID control – it all starts here

The most important factor, of course, is the COVID-19 pandemic, and the rollout of vaccinations that will make more normalized social behavior safe once again. When that happens, there will be a release of the pent-up demand that has constrained our economy over the last year.

The U.S. savings rate – which has typically hovered around 7 percent for the last decade, jumped above 25 percent in April 2020. It dipped back down 15 percent in December, but that’s still more than double what it had been previously, under normal circumstances. When the vaccination rate reaches the point where more normalized social behavior resumes, we believe the release of that pent-up demand will help the service sector recover quickly. Factor in the increased economic activity associated with the $1.9 trillion stimulus package currently being completed by the federal government, and it’s not hard to see why we believe in a rapid recovery.

Don’t believe the GameStop hype

Still, it’s easy to understand why the headlines surrounding GameStop, AMC, and other heavily shorted companies can cause concern. Volatility in the stock market can be unsettling to observe, particularly if investment income is a part of your long-term financial plans.

The good news is that long-term plans are just that: long-term and planned.

At FCB Texas, we’re not opportunists or gamblers. We encourage our wealth management clients to be diversified in their stock holdings, to stay on top of the news, and make sure our advisors are doing the same thing (good news: they are!). Our wealth management strategies are built on sound fundamentals, which we use to assemble portfolios that are designed and tailored to suit each client’s objectives. Those kinds of investments aren’t the ones that get wrapped up in a controversy like the one surrounding GameStop.

As for the market itself, the S&P 500 had a strong bounce-back year in 2020 despite the chaos in the air, and robust earnings are forecasted for 2021. So, as long as you stay diversified in your investments, the kind of frenzy that’s been associated with the likes of GameStop and AMC isn’t really something to be concerned about.

The bottom line: Light at the end of the tunnel

At FCB Texas, our goal is putting our clients in position to succeed. While that’s been a challenge over the past year, we’re proud of how we’ve helped many navigate these trying times, and we’re looking forward to helping you achieve greater financial health in 2021 and beyond. To learn more about how we can do that, click here.