After a year that was difficult in so many ways, we are looking forward to a better 2021. How the markets acted last year provided yet another reminder that it is impossible to time the markets, and things turn very quickly in both directions. Last year our investment performance was solid. During the market dip in March we added to stocks for clients who had the risk tolerance and available cash, resulting in substantial gains. A defined process for selecting securities and constructing portfolios is critical for success, yet I believe limits are created by a lack of adaptation. Thus, we continue to test our processes to ensure we are creating portfolios that will perform well in a myriad of economic and market environments.
Please visit the “Market Updates” tab for a brief overview of 2021 and important portfolio actions to consider for this year!
Today the Dow Jones Industrial Average closed above 30,000, shattering record levels. 2020 has been riddled with so many challenges, but we have continued to work hard to protect and grow portfolios. Today further amalgamates the principle that successful investment results require both good planning and patience. The Pawleys Dividend Fund is a core holding for many investors. We invest in stock of companies with little or no debt, good earnings growth, and rock solid cash-flow. At these all-time historical levels the Pawleys Dividend stocks are beating the market significantly – by over +9% this year! This means the fund generated an extra $54,000 for every $500,000 invested in these stocks compared to the performance of an index mutual fund. We appreciate having the opportunity to help our clients, and are so grateful to have everyone’s trust and confidence during this unprecedented time. Warren Buffet has said never bet against America – corporate earnings continue to be solid, and the progress being made on the medical front to stop the pandemic is amazing. Thank you very much to all of our clients for allowing us to be of service. We hope you stay healthy and safe, and find peace and gratitude in your celebrations this week. Happy Thanksgiving!
One week from today is Election Day. The opening words of our Constitution, “We the people of the United States,” will be buried in rhetoric from both parties over the next several days as divisions are further stoked. While an important aspect of investing is to not let emotion and behavior work against you, noisy political rhetoric can make that difficult. And in the midst of uncertainty it is hard to see the big picture. The #1 way to build wealth is to invest in stock of high-quality companies that have little or no debt, good earnings growth, and rock-solid cash flow – and the outcome of the elections will not at all change how well that strategy works. Data shows that the markets do well regardless of political control in Washington.
We never get to the point where uncertainty and concern goes away. Here we sit, just 5% below all-time highs in the markets, during one of the most challenging years I have seen during my 28-year career. Wow, time flies! Year-end is a great time to revisit your big-picture financial/investment plan, so please reach out to us if there have been changes in your life that warrant adjustments to how we manage your portfolio. This year has been difficult in so many ways, and we are so thankful that you continue to have confidence in our ability to navigate 2020 and produce profitable investment results for you.