January 2021
Happy New Year! 2020 was one of the more challenging years of our lifetime. We learned a lot through our conversations with clients over this past year. 2020 taught many of us the importance of our health (physical and mental), our relationships, and the importance of wellness in all areas of our lives, not just financial aspects. For this reason, in 2021, in addition to financial and investment planning, we will be introducing topics focused on your lifestyle, health, and exercise. We will also be launching our "town hall" webinars with experts in these areas. Our mission is to help you Preserve Your Assets and Protect Your Lifestyle, and we can think of no better way to fulfill this goal than by offering more than just financial planning and wealth management advice. Our hope is you enjoy our new approach and will discover new ideas for bettering your life in 2021 and beyond!
Market Opinion: The Democrat Agenda and Industry Beneficiaries
Key Takeaways
Bipartisan senators could significantly impact spending plans.
A portfolio manager recently commented, "it feels like 2020 never ended." The U.S. continues to struggle with the virus, and Democrats are trying to impeach Trump. Still, COVID vaccines are being administered, albeit slowly, and we will have new political leadership on January 20.
The Democrats take control of Congress with the slimmest of margins in the Senate, and the next two years should offer plenty of political theatrics. On the one hand, Republicans will want to stymie the Biden administration from accomplishing anything to prove he is ineffective. On the other hand, several Republicans may be willing to deal given they have 20 Senate seats up for re-election in 2022, versus only 13 for Democrats. The most concerning aspect for Democratic spending aspirations is that they all claim to be fiscally conservative. Does that mean any stimulus will include a tax hike?
Free Money But For How Long
The COVID era has created a window of issuing free money (large fiscal stimulus without tax hikes), but that window could be closing if vaccines create herd immunity. Democrats need to "make hay" while the window is open and choose their first spending target(s) carefully and quickly. Impeaching Trump again is seen as a waste of valuable time by some. We take this period of transition as an opportunity to revisit our 2020 election themes and sharpen our focus to those that should benefit from the Democratic agenda for the next two years.
We see four key agenda items, in expected order of importance, as 1) Infrastructure spending, 2) Clean energy/climate control, 3) Bolstering the Affordable Care Act, and 4) Technology regulation.
Infrastructure - We think Democrats will make infrastructure spending a top priority (after COVID funding) for two reasons. First, it is more politically desirable to have fiscal stimulus aimed at "Main Street" than "Wall Street." Second, Biden's main campaign theme was to "build back better," indicating infrastructure is a top priority.
Clean Energy - Any major stimulus bill should placate Democrats clamoring for action on climate control. An increase in electric vehicle (EV) charging stations and/or tax credits for purchasing EVs would certainly be welcomed. Providing incentives for wind and solar energy could also be a priority. Any clean energy plan should also include fossil fuel and pollution reduction. This would benefit Independent Power Producers, Renewable Energy, and Pollution Control industries.
Affordable Care Act - According to the American Population Survey, the percent of health care uninsured has risen every year since bottoming out near 10% in 2016. Biden, a big proponent of the original ACA, will undoubtedly do everything in his power to defend this act. Also, the Supreme Court looks poised to uphold the constitutionality of the ACA once again.
Technology Regulation - While we do not see Democrats going full-out anti-trust assault to blow up the largest tech companies, we expect a barrage of lawsuits from the DOJ and state Attorney Generals to create an overhang for some time. Facebook already has had such an anti-trust suit that seeks to unwind its Instagram and WhatsApp acquisitions. Google has also been hit with a lawsuit by a group of Attorney Generals and the DOJ, alleging it has unlawfully manipulated search results.
This Is Life
2020 was a year we could have never imagined. As we reflect on the last 12 months and turn the page to 2021, you might be thinking about what you have learned and have begun creating goals or resolutions for 2021. We have done our own reflection at GFP. In this month's This is Life, we wanted to share some ideas that might help you in the coming year:
There Is A "Silver Lining" In Change – Change is a constant in our lives, planned or unplanned. What a gift and opportunity! We are not driving as much, so consider using the extra time to establish new habits. With more cooking at home, try some new and healthier recipes. Add a little cardio to your routine. COVID will not be here forever, but the new habits we establish could affect the rest of our lives profoundly. Let's do all we can to make our new habits positives!
Your Mindset is Everything - I have been reading/listening to "Younger Next Year," a book by Chris Crowley and Henry S. Lodge, MD. Whether I am hiking, riding my NORDIC Track, or driving my car, I have realized the importance of a positive mindset, especially at the beginning of the day. A healthy and positive start can lead to remarkable outcomes and benefits to your health, attitude, and fitness. I have lost weight, gotten in better shape, and become more involved with clients and friends using ZOOM or simply talking more on the phone. It all began with listening to a book a few minutes a day and implementing what I learned. It taught me that we can all take simple little steps that can lead to profound life-changing outcomes. Think of some simple ways you can kick start your day. More importantly, commit and execute. It's all about Mindset!
Own Your Day – Every day is an opportunity to grow, improve and prosper. Once the day is done, the time is lost. Take ownership of every day and make it special and life-changing. Every morning, we all look in the mirror, brush our teeth, wash our faces, and go through our morning routine. I challenge you to take 5 seconds, look yourself directly in the mirror, and ask, "How am I going to OWN today?" After all, it's YOUR day, so MAKE it special.
We hope 2021 is a positive and memorable year for you and your family. As always, you are the reason why we are here. We are incredibly grateful to continue to work with you and be a part of your lives.
We are here to help and offer objective advice. If you would like to discuss any of these topics or any questions relating to financial planning and/or the markets, please click here and pick a time on our calendar.
