Seamark View

INVESTMENT MARKET OVERVIEW

4th Quarter, 2020

Prepared by

R. William Blasdale

January 2021

 

Here are the indices that we typically review:

                                                                                                                                                        2019                                                                   2020                                                                                                                         

Russell 1000 (Domestic Large Cap):

  31.43

20.96

         Russell 1000 Large Cap Growth

  36.39

38.49

         Russell 1000 Large Cap Value

 26.54

  2.80

Russell 2000 (Domestic Small Cap Stocks):

 25.52

19.96

          Russell 2000 Growth

 28.48

 34.63

          Russell 2000 Value

 22.39

   4.63

Russell Mid Cap

29.87

17.10

          Russell Mid Cap Growth

35.14

35.59

          Russell Mid Cap Value

26.17

   3.73

MSCI EAFE (International Stocks):

 22.01

  7.82

MSCI Emerging Markets:

18.42

18.31

Fixed Income (Bloomberg Barclay’s US Agg):

   7.28

   7.51

 

 

 

 

 

 

 

 

 

 

 

 

                                               

 

 

 

 

 

 

While the 12-month data are firmly in the black, most of the “action” took place in the 4th quarter.  Here is a quick comparison of the year-to-date returns for the major equity categories:

                                                                                                                                YTD 6-months   YTD 9-months   YTD 12-months

                                                                Domestic Large Cap                                  -2.90%                   6.40%                   20.96%

                                                                Domestic Small Cap                                -12.98%                 -8.69%                    19.96%

                                                                Domestic Mid-Cap                                     -9.13%                 -2.35%                    17.10%

                                                                International                                             -11.34%                 -7.89%                     7.82%

 

The 6-month numbers reflect the market collapse in March. Following that, we saw  some degree of recovery in the 3rd quarter, and then a real surge in the 4th quarter.  Timing of exit and entry points this year was crucial in terms of overall perfformance.

Well, what a year it was!  Covid 19, lockdowns, turbulent politics - I was rather suspecting that a plague of locusts was due any minute! That being said, any type of “growth” equity had a spectacular year.  The trend of growth trouncing value that we have seen for some time continued unabated.  In essence, it is a tale of technology (Growth) vs. financials and energy (Value).  Growth stocks have been largely powered by the large cap “FAANG” (Facebook, Apple, Amazon, Netflix, Google) issues which have been the market darlings for the past 10-years or so.  The economic disruption caused by Covid 19 has heavily favored technology related stocks, as more and more of what we all do has gone “virtual.” Technology can’t grow to the sky forever, and there are indications that the sector may be over-priced.  Indeed, the “Growth” sector is now priced at @22 times projected 2022 earnings.  That is expensive!  And when interest rates start to rise (as they slowly will), value may well come back into favor.

We are also experiencing a continued weakening of the US dollar, which will favor international equities.  Bottom line:  we need to maintain exposure to all styles and asset classes, as it is virtually impossible to time these potential changes.

On the fixed income side of the ledger, it was a good year for bonds, but last year’s returns will be difficult to duplicate.  While the FED has committed not to raise rates aggressively until 2024 – 2025, yields may drift higher in the interim.  While that is a good thing in terms of the yield or interest rate that bonds pay out, rising rates mean that the value of existing bonds goes down.  Bottom line: returns on bonds going forward will be muted, but they remain an excellent source of diversification and an “anchor to windward” when equity markets go haywire (as they did last March).

So, what is the investment outlook for 2021?  As always, predictions are extremely difficult, and especially now given all the roiling undercurrents we are experiencing.  I would not be surprised to see episodes of short-term turbulence as Covid 19 continues to rampage throughout the country and our domestic politics continue to be an absolute mess.  In terms of the trends, however, the majority opinion seems to be that the economy will have a difficult first half, with improvement in the 3rd and 4th quarters.  The recovery will be uneven, however, with “people-facing” industries (travel, restaurants, etc.) continuing to face headwinds.  At this point, I cannot even venture a guess about how the political front will impact the economy - these are totally uncharted waters.

Performance reports for last year are enclosed.  As I mentioned above, overall performance this year was  heavily dependent on  exit and entry points. We will be reaching out soon to discuss our thoughts on  portfolio rebalancing for the new year, and we will review your performance numbers with you at that time.  If you have questions or concerns on any matter before you hear from us, however, please don’t hesitate to call. 

As always, Lynne and I are deeply appreciative of the trust you have placed in us and for your continued confidence.

R. William Blasdale

January 14, 2021

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. This presentation may not be construed as investment advice and does not give investment recommendations. Any opinion included in this report constitutes the judgment of Seamark Financial Services, Inc. (Seamark) as of the date of this report and are subject to change without notice.

Additional information, including management fees and expenses, is provided on Seamark’s Form ADV Part 2. As with any investment strategy, there is potential for profit as well as the possibility of loss.  Seamark does not guarantee any minimum level of investment performance or the success of any portfolio or investment strategy. All investments involve risk (the amount of which may vary significantly) and investment recommendations will not always be profitable.  The investment return and principal value of an investment will fluctuate so that an investor’s portfolio may be worth more or less than its original cost at any given time.  The underlying holdings of any presented portfolio are not federally or FDIC-insured and are not deposits or obligations of, or guaranteed by, any financial institution. Past performance is not a guarantee of future results.

Presentation is prepared by: Seamark Financial Services, Inc.

(508) 758-6159

www.seamarkfinancial.com

Copyright © 2016, by Seamark Financial Services, Inc.

 

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