Winners and losers this year
I’m often asked questions about specific investment ideas that match its unique goals. While I am not authorized to make specific recommendations in this forum, reports of significant trends are considered acceptable. For example, because of the global warming debate, you might think the energy sector would fall out of favor. Likewise, financial services may have appeared to be overlooked by investors. Wrong! Within the S&P 500, according to Amundi Asset Management, as of May 14, energy companies have led the pack so far this year with a return of 42.8%, while financials are in second place with 29.1%. The most interesting thing is that technology is in last place with a return of 4.5%. Translation: Those who have stuck with old high-dividend favorites in the energy and financial sectors have been well rewarded for their patience. Conversely, although many are convinced that Apple, Amazon, Facebook, etc. will rule the world – this has not been the case so far this year. It’s also a reasonable argument for individual stocks (if you own the right ones). There is a huge gap between the sectors. If you had simply owned the entire S&P 500 Index, there was quite a difference between the big winners and the losers. The Amundi group expects this trend to continue for the foreseeable future.
Another impending trend is the progress of the pandemic. According to the CDC, as of Friday, May 14, 119 million Americans had been fully immunized. This represents 36% of our 332 million inhabitants. The Wall Street Journal reports their concern that recent communication on social gatherings, masks, distances, vaccines, etc. was poorly broadcast, causing a lot of risk, worry and confusion. The notion of being on the “honor system” to find out if you’ve been vaccinated – or not – is a bit confusing. Only time will tell if we have gone too fast in reopening our company. Watching the death trajectory, while still worrisome, is certainly going down. We in the United States are now at 587,000 deaths and Covid counts. One recent day saw 291 deaths – while recently in February we had 7-day averages in the order of 3,500. It is reminiscent of the 1960s and early 1970s when we looked at body counts. of the Vietnam War on television every night. One can only hope that the continuous vaccination process – recently extended to adolescents as young as 12 – will prevent future outbreaks from sending us back to where we were at the height of the pandemic.
While the overall picture for your investment account continues to look very positive, you can’t look past the inflation conversation. Philip Orlando, chief stock market strategist at Federated Hermes, sums it up as follows: The Federal Reserve (whose mandate is to control inflation, interest rates and peak employment) has maintained a calm voice. suggesting that recent spikes in inflation will prove to be temporary (they call it transient). However, Orlando notes that wages rose at an annualized rate of 8.4% in the recent April report. Salaries are the most important factor in inflation calculations. The prices of commodities – such as wood, copper, petroleum, corn and soybeans have turned vertical over the past year. He argues that companies will be tempted to pass these costs on to consumers, which will make the Federal Reserve too cautious in its estimates. We’ll see. I can tell you that my unscientific observation, as I navigate everyday life, seems like everything costs more! Fortunately, when it comes to the overall economic situation of the country, there is a lot of money to be spent at all costs. This should be helpful in maintaining a healthy financial recovery.
The opinions expressed in this document are given for general information only and are not intended to provide specific advice or recommendations to an individual. To determine which investment (s) may be right for you, consult your financial advisor before investing. The economic forecasts presented in the presentation may not develop as expected and there can be no guarantee that the strategies promoted will be successful. The referenced performances are historical and do not guarantee future results. Not all indices are managed and cannot be invested directly. Investing involves risks, including loss of capital.
RFG Advisory and its investment advisor representatives do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon, for tax, legal or accounting advice. Please consult your own tax, legal and accountant for advice on these matters.
Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER ™ Professional at Williams Financial Advisors, LLC. Securities offered by registered representatives through private client services, FINRA / SIPC member. Advisory products and services offered by investment advisers through RFG Advisory, a registered investment advisor. RFG Advisory, Williams Financial Advisors, LLC and Private Client Services are unaffiliated entities. The branch is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.