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My 2021 Financial Resolution

By Richard Schooley


Exploring our families’ financial health journeys.

I have lived long enough to know that new year’s resolutions require more discipline than good intentions. I have also lived long enough to have seen a number of market highs and to have had my share of misses. Maybe it’s true that with age comes a bit of wisdom, even if it is hard-earned. This time, I’m going to keep my eye on a shift from growth stocks to value stocks. That’s my financial resolution for the new year. Here’s why:

Nothing lasts forever. 

Looking back over the last ten years, growth stocks have had an unusually long and successful run, and for good reasons. Tech companies obviously played a large role. But the pandemic ruptured the economy even as it created clear market winners. Now, mercifully, there is a vaccine. Two even. While the most important aspect of the vaccines from Pfizer and Moderna is the effectiveness against COVID-19, the very presence of the vaccines seems to have created a dawning in the markets known as a market rotation. 

The very presence of the vaccines appears to have created a dawning in the markets known as a market rotation.

Some say the last significant market rotation happened just after the tech bubble burst and the market had hit its high point in March of 2000. Simply put, a market rotation is when money stays in the stock market but moves from one sector or type to another—like from growth to value stocks, for instance. Growth stocks have had an unusually long run. So why am I keeping my eye on value stocks?

Historically, value stocks—like banking and finance—perform well during periods of strong economic growth. For various reasons, regulations being one, value stocks have not kept pace with growth stocks in the last decade plus. However, just as surely as the pandemic has wreaked havoc on the economy, there will likely be an economic recovery. The vaccine is a potential signal that recovery is ahead, even if the it doesn’t truly begin until later in 2021. 

My new year’s financial resolution is based on the likelihood that we are soon to enter the post-pandemic economy. There will still be work-from-home stocks and other growth stocks, but the vaccine may just lead us back to value stocks in finance, industrials, and energy. Right now, I believe those stocks are undervalued compared to growth stocks. 

So, will I re-balance my portfolio? Yes. Will I update my estate plan because changes are surely coming? Yes. Will I also stay vigilant and look for value stocks. I will. 

That is my new year financial resolution.

Investing involves risk, including possible loss of principal. Growth investments may be more volatile than other investments because they are more sensitive to investor perceptions fo the issuing company’s frowth of earning potentia. Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long period of time. The opinions and statemetns presented herein are general information only and are not intended to provide specific investment advice or recommendation. There is no assurance that the strategies will be successful

Your family financial health is the goal.

The simple, powerful reason to focus on your financial health is to take good care of yourself and the ones you love. We’ll help you do both.