Q1 2021 Market Commentary

Q1 2021 QMR
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We are nearing the end of the first quarter of 2021, and you are likely hearing quite a bit of economic and political information in the media. For that reason, we feel it is important to share our perspective and current position on your investment portfolio.

Most often, we send these updates when we have decided to adjust portfolios or rebalance entire client portfolios. This time, we want to share why we are choosing to “sit tight” with intention on our equity allocation while making adjustments to our fixed-income allocation.

Currently, a widening yield curve, ongoing vaccine distributions, and additional economic stimulus are all contributing factors leading to the positive revisions we’re witnessing in expected earnings over the next 6-12 months.[1]  As the projected earnings data we consistently track continues to strengthen, we believe that as stock prices have pushed higher, they remain fairly valued.  For this reason, we are allowing our equity allocations to float above our target.  Should the data begin to shift to indicate otherwise, we may decide to rebalance at that time. 

One key economic trend we are seeing that could impact client portfolios is the possibility of near-term inflation caused by rising commodity prices and significant stimulus funding from the Fed leading to the potential for an overheated economy.  Thus, we plan to begin incorporating TIPS (Treasury Inflation-Protected Securities) into our client portfolios on the fixed-income side of our target allocations.

Our decisions to hold equities at their current levels and integrate TIPS into our fixed-income allocation are driven by our core guiding philosophies.  We believe that risk and return are related, markets are efficient over time, profitability matters, and diversification is key. We remain disciplined and focused on the long-term so that you can feel confident in the probability of achieving your goals.

 Take a look at our Quarterly Market Review for insights on statistics and trends in domestic and global stock markets.

The views expressed represent the opinion of Resolute Wealth Advisor, Inc. (RWA). The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While RWA believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the RWA’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.

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