Week 44 - $837.10
After months of economic recession, the stock market continues to climb near the S&P 500's all-time highs.
Total Report (Since October 11th, 2019)
Positive Performing Sectors
1. Materials (+32.65%)
2. Industrials (+23.59%)
3. Consumer Discretionary (+22.95%)
4. Consumer Staples (+20.50%)
5. Healthcare (+15.64%)
6. Financials (+9.32%)
Negative Performing Sectors
7. Utilities (-7.93%)
8. Communication Services (-10.90%)
9. Information Technology (-11.95%)
10. Energy (-13.50%)
11. Real Estate (-16.23%)
1. Materials (+32.65%)
2. Industrials (+23.59%)
3. Consumer Discretionary (+22.95%)
4. Consumer Staples (+20.50%)
5. Healthcare (+15.64%)
6. Financials (+9.32%)
Negative Performing Sectors
7. Utilities (-7.93%)
8. Communication Services (-10.90%)
9. Information Technology (-11.95%)
10. Energy (-13.50%)
11. Real Estate (-16.23%)
Weekly Report (August 14th, 2020)
Positive Performing Sectors
1. Materials (+3.47%)
2. Energy (+2.78%)
3. Consumer Discretionary (+2.61%)
4. Industrials (+2.60%)
5. Consumer Staples (+0.82%)
6. Healthcare (+0.77%)
7. Information Technology (+0.73%)
8. Financials (+0.18%)
Negative Performing Sectors
9. Communication Services (-0.01%)
10. Real Estate (-0.19%)
11. Utilities (-1.55%)
1. Materials (+3.47%)
2. Energy (+2.78%)
3. Consumer Discretionary (+2.61%)
4. Industrials (+2.60%)
5. Consumer Staples (+0.82%)
6. Healthcare (+0.77%)
7. Information Technology (+0.73%)
8. Financials (+0.18%)
Negative Performing Sectors
9. Communication Services (-0.01%)
10. Real Estate (-0.19%)
11. Utilities (-1.55%)
GICS Sector Performance Ratio - Balanced: From 9:2 (81.82%) to 8:3 (72.73%)
Review
Stocks are poised to break the S&P 500's record highs as valuations climb further up, even as an economic recovery is anticipated to take longer than expected for activity to return to normal levels.
Such climbs in stock valuations highlight the fundamental differences between the stock market and the overall economy. Stock markets are forward-looking. The economy is backwards-looking. Stock markets only reflect what investors are willing to pay to own shares of companies that are listed in the stock exchange. The economy encompasses everything, particularly small businesses. As a result, the stock market will often deviate from the realities of the economy, illustrated by the continuing increase in stock prices despite evidence to the contrary that the economy will not rebound to previous levels before the pandemic crisis as quickly as believed. The stock market is anticipated to experience volatility before any signs of stability surfaces, and that will definitely become the case as the race for the COVID-19 vaccine continues.
Thus, it is wise to be wary of overvalued stocks as the year comes close to the fourth quarter. While an economic recovery is inevitable, the speed at which it will recover can never be predicted. The best course of action would be to continue investing as normal and seek out undervalued, good-quality businesses with strong and sound fundamentals. If a company had done well in the past and are still doing well now, then it is all the more reason to continue to believe the company will continue to perform as their results have proven.
Such climbs in stock valuations highlight the fundamental differences between the stock market and the overall economy. Stock markets are forward-looking. The economy is backwards-looking. Stock markets only reflect what investors are willing to pay to own shares of companies that are listed in the stock exchange. The economy encompasses everything, particularly small businesses. As a result, the stock market will often deviate from the realities of the economy, illustrated by the continuing increase in stock prices despite evidence to the contrary that the economy will not rebound to previous levels before the pandemic crisis as quickly as believed. The stock market is anticipated to experience volatility before any signs of stability surfaces, and that will definitely become the case as the race for the COVID-19 vaccine continues.
Thus, it is wise to be wary of overvalued stocks as the year comes close to the fourth quarter. While an economic recovery is inevitable, the speed at which it will recover can never be predicted. The best course of action would be to continue investing as normal and seek out undervalued, good-quality businesses with strong and sound fundamentals. If a company had done well in the past and are still doing well now, then it is all the more reason to continue to believe the company will continue to perform as their results have proven.
The Dividend Aristocrats 2020 portfolio has been updated. 2 new companies have been added:
Industrials (2)
Carrier Global (CARR) - N/A
Otis Worldwide (OTIS) - N/A
Last Week's Update (August 7th, 2020)
M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO
M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6
M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO
M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6
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