First Quarter 2021 Market Summary
As we highlighted in our Market Recap, most broadly diversified portfolios of stocks and bonds likely experienced positive but modest returns during the quarter. After the wild swings and stress of the prior year, a short respite and return to something more familiar, or even ordinary, was a welcome result. There have been plenty of instances throughout history when strong market surges, like that experienced during the last nine months of 2020, were followed by pullbacks, so a “pause” (as we described it previously) is certainly a preferable result.
Despite what may be viewed as a rather mundane (relative to 2020) or normal (if there is such a thing) quarter, there were several subplots and trends that were noteworthy and potentially create opportunities for investors. In fixed income, rising inflation expectations pushed bond yields higher. While that was clearly a short-term negative, the silver lining is that higher yields improve the prospects for future fixed income returns. On the equity side, the impressive outperformance of value and smaller capitalization companies means that despite overall valuations being expensive, pockets of opportunity still exist.
This last quarter hopefully allowed investors to catch their breath a bit. It’s impossible to know what the remainder of 2021 will bring, but it’s probably a safe assumption that we’ll experience bouts of volatility along the way and we need to be prepared and ready to act. Volatility can create opportunity, and unlike the gentleman in the cartoon, we believe a philosophy that aims to “buy low, sell high and stay diversified” isn’t a scheme, but simply sound advice.
As always, each advisor at Smith & Howard Wealth Management is available and eager to answer your questions on these or other topics related to investments and financial planning. Please call us at 404-874-6244 or email us here.
Unless stated otherwise, any estimates or projections (including performance and risk) given in this presentation are intended to be forward-looking statements. Such estimates are subject to actual known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those projected. The securities described within this presentation do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in such securities was or will be profitable. Past performance does not indicate future results.