New Year New Highs - January 13, 2021
Major stock market indexes climbed to new highs last week, as the economic narrative from last year carries over into 2021.
- Low interest rates offer little competition to stocks.
- New economic stimulus is supportive of economic growth.
- The economy is expanding, though growth is uneven amid new restrictions and rising Covid cases.
- Vaccines may slow or end the pandemic, though the rollout has been slow.
Short term, momentum is driving shares, as the new year has opened the gates for new money to flow into stocks thanks to economic optimism.
Meanwhile, political strife and uncertainty have been taken in stride by investors who don’t currently see it as a threat to the economy.
Let’s keep one important principle in mind. Adhering to a well-balanced, well-diversified financial plan has historically been the best path to long-term financial success.
The financial plan puts the brakes on what are usually ill-timed decisions to sell when stocks run into turbulence.
The plan is also designed to keep investors from taking on too much risk when euphoria sends shares to new highs on a regular basis.