07 Jan 2021 A Lot of Questions

I can remember walking into my first economics class back in 1992. The professor had drawn a chart titled something like, Supply, Demand and The Flow of Money, Goods and Services, on two huge chalkboards that covered the front wall of the theater style classroom. It looked something like this only much more complex.

My professor had also included other layers like interest rates, capital investments and foreign currency exchange rates. After studying the chart for some time, I remember thinking, “how in the world are we supposed to make sense of such a complex system?”

We’re about a week into the new year and with everything that’s going on in the world right now, I’m reminded of the chart my college professor labored over almost 30 years ago. Between election run-offs, vaccine rollouts, Federal Reserve activity, fiscal stimulus, ultra-low interest rates, and lofty investment valuations, it’s a difficult time to be an investor, business owner, employee (or human being for that matter!) At this point there are probably more questions than answers.

• How will the election results impact future tax rates?
• How much fiscal stimulus can we expect and how will it impact the economy and the stock market?
• How long will it take for the vaccine to end the pandemic and how will businesses and the economy fare while we wait?
• How will big tech stocks be impacted by the potential for more regulation?
• Will the stock market perform poorly under higher corporate tax rates and other factors or will we have another banner year as life returns to some sense of normalcy?

I could spend time adding to this list of questions but instead there are two things I’d like to say.

One. Now, and perhaps more than ever, it’s important to have a road map for where you want to go (a financial plan) and a solid investment philosophy that controls the things that can be controlled and minimizes emotional mistakes. Yes, our road maps will need to be adjusted and our investment philosophies may need some tweaking, but without the two, we run the risk of our financial lives becoming like a ship that’s tossed and driven, battered by an angry sea*.

And, two. Rest assured that we at Beacon are giving thought to all the questions I listed – and the ones I didn’t. We’ll let you know if your financial plan or portfolio need any changes. In the meantime, please let us know if you have any questions or concerns.

*Thomas Dorsey (and Bob Marley!)