February 2021 - Monthly Update
Kaitlyn Richardson - Feb 01, 2021
Your portfolio was break even (no gain no loss) during the month of January.
You remain with positive performance over the last twelve months.
Stock markets ended the month around where they began (somewhat lower than December). In January, headlines focused around the erratic behaviour of a few highly speculative stocks and the transition of power in the United States (U.S.). This was of no effect to your diversified investment portfolio of high quality stocks and bonds.
Away from the front page, U.S. companies began reporting earnings and the results were better than expected. Guidance was also increased for the year ahead. More and more leaders spoke to an economic recovery that is gaining momentum.
At some point in 2021, the Canadian and American economies will be back to pre-lockdown size. From there, a new cycle of economic growth begins. It will be defined by the shifts in our behavior that come from our experiences of the past year. The world will be a lot more local and domestic than it was in 2019. Industries such as technology, health care, transportation and the consumer sector will continue to benefit from the tailwinds and positive trends already in place.
The old saying of two steps forward one step back will likely apply to any of the major headlines (jobs, stimulus, vaccine distribution, etc.). We are moving ahead and forward and the original lockdown is getting further away. This is a good thing.
In time, the weather will improve, transition to the new will be further along (from the old world we are living in today) and confidence on an individual level will improve and lead to the act of spending.
The U.S. economy (as measured by gross domestic product G.D.P.) grew by over 4% during the fourth quarter – an encouraging signal.
You remain in a strong position financially. Our strategy is sound and unchanged: Own a properly diversified portfolio of high quality investments aligned with the positive trends.
The view from Brian Belski, BMO's Chief Investment Strategist:
“Bubble Rhetoric Overshadowing Fundamental Realities…It was an eventful start to 2021 for US stocks with the S&P 500 rising to new highs during the first three weeks of January, before plunging 3.3% and ending the month down 1.1%. A surge in bubble rhetoric during the back part of January drove stocks lower with stretched valuations, elevated sentiment, and contagion worries over retail driven short squeezes among the widely cited concerns. To be clear, we do not share these bubble fears. In fact, we believe this rhetoric has largely overshadowed many of the fundamental realities of US stocks, including strong Q4 EPS beat rates, positive EPS revisions momentum, and upside risk to consensus economic growth, not to mention the potential tailwind of massive fiscal stimulus in 1H. As such, we remain bullish on US stocks... Looking ahead, there may very well be additional market drawdowns and bouts of volatility like we saw in late January, but if the fundamentals of the market remain intact, they should represent buying opportunities for investors rather than reasons to sell, in our view... Respite for the Underperformers… While a late sell off pushed Canadian equities into negative territory this month with the S&P/TSX declining 0.6%, the overall market saw more mixed results… [W]e continue to believe the cyclical areas are well positioned to outperform in the near term and the TSX will likely maintain positive momentum … [M]arking a new all-time high for the TSX.”
Stocks in your portfolio that made a new 52 week high this past month:
Johnson & Johnson*, JPMorgan*, Microsoft*, Qualcomm*, S&P 500 Index
Stocks in your portfolio that made a new 52 week low this past month:
None
The Loonie gained another half cent versus the US dollar to:
$0.78 (a three-year high)
Thank you and all our best,
Ian, Gab & Kaitlyn