Mid-year Investment Check

Jason Cerniglia of Ameriprise Financial and Coastal Wealth Management, takes a look at our financial future

Financial experts generally suggest a mid-year checkup around June to take stock of where we are financially and what the outlook is for the rest of the year. We thought a check on our market investments would make sense, given the roller coaster year we had in 2020 and the more stable environment we seem to be in thus far in 2021. We called on Jason Cerniglia, a private wealth advisor with Ameriprise Financial Services. Named to Forbes Best-in-State Wealth Advisors for 2021, Jason is also chief executive officer of Coastal Wealth Management. 

1. How did the market fare in 2020?

From just a market perspective, 2020 was a very good year in terms of market return. At the beginning of the year, the market was down 35 to 40 percent, but by the end of the year it was up 17 percent. So if you were just looking at how the market performed it was a good year. But economically speaking, of course, it was a very challenging year. There was this big dichotomy between how the market had this record-breaking recovery, but economically it was a very difficult year.  

2. With all that in mind, how is 2021 shaping up at this mid-year point?

At this moment in time it’s going pretty well. The beginning of the year was a little choppy, there were concerns about inflation and what we’re hearing about now is that there’s a risk of inflation and rising interest rates and that can create hiccups in the market. But outside of that there is a dramatic recovery taking place in the economy and there’s been a lot of stimulus pumped into the economy, so the next 4 to 6 months could be pretty prosperous from a stock market and economic perspective. There are millions of people who have built up cash reserves during the pandemic, they have travel credits and they’ve gotten vaccinated so they’re starting to travel and all of that will start to pump a lot of money into the economy. We added 912,000 jobs in April and we'll likely add more than 1,000,000 jobs per month for, at least, the next few months. The economy, for the next few months, is going to be pretty prosperous. 

3. Are there any market disruptions out there we should be concerned about? 

The next few months are going to be pretty prosperous but after that we start to get a little bit concerned because we just don’t know what’s going to happen when all this bump we’re seeing from the stimulus plays out. There are trillions of dollars that have been pumped into the economy and when that’s all spent, what happens next? At the same time, the government is talking about raising taxes in a lot of different areas. Corporate tax rates will likely go up 5 to 7 percent and if it does, that money won’t be available to be spent in other areas. Other personal tax rates might go up as well as interest rates if the economy heats up a lot, which we expect it will with so many jobs being created. The GDP will go up dramatically and that means the economy can overheat and that’s not good. When the economy overheats the Fed could raise interest rates and that’s bad for the stock market. If that happens, we’ll be talking to clients about moving into safer investments by September. But for now, at this moment in time, we’re in a much more stable environment from both a market and economic perspective. Lots of people are going back to work, lots of people are getting vaccinated, and market volatility has been greatly reduced.

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