After listening to many economic outlook forecasts, reading economic reports from top economists, and researching market activity, one can find common themes:
- Many industry experts are looking for the US Dollar to continue to decline and interest rates to remain low.
- International stocks to outperform domestic stocks.
- Rising inflation to lift commodity prices.
But what if these outlooks fail to materialize? Could we see a reversion to the mean that catches investors off-guard? Sure, anything is possible. The human decision-making process still dictates the investment process, which opens the door to emotional behavior – both Euphoria and Panic. The Wall Street adage that fear and greed drive the markets; however, at market highs, the fear of missing out can be a driving factor to advance the markets. No one knows what will come next month or next week or even tomorrow. News flow will intensify and could become a catalyst for the markets as investors will be focusing on corporate earnings reports, economic data, inflation rising faster than the Fed’s 2% projection, additional stimulus, and President Biden’s policy changes. We do our best to stay objective, follow our process, and balance the risk-reward of each investment opportunity made in your portfolio with the information we have at a given time.
Keep an eye out for the recording of our Annual Forecast Presentation next week as we dig deeper into the topics above!