A Comment -- General Comments From an Expert (A Commentary)

Georgia senate race. It would be easier for Congress to spend on infrastructure if the democrats win. We see this particularly in the gold sector where it reflects the printing of money for these programs if the dems win. From a market perspective, the only reason the markets are stable is with the promise of more spending.

He hopes the bull market run this time won't end in tears, but fair market value is around 20-50% lower. However, it is hard to predict where it tops out. It could be years. He's not sure if the correction will come this year, but there will be volatility to take advantage of. There is still a lot of money on the side lines.

Educational Segment. At market tops, where we see divergencies in stock price and momentum there is market breadth. When there is market breadth, we usually get good follow through. Over the next couple weeks, he is keeping an eye out for market breadth indicators that points to volatility in Q1. Q1 should offer a buying opportunity. Market breadth is very strong and average stocks should see some performance. He would shy away from over invested large cap tech where we could see under performance. He has shifted from large cap names to an equal weight allocation.

Market. 2021 will differ from 2020 because 2020 had an unprecedented volatility in the markets. We will see a re-opening of the economy as we get a large portion of the population vaccinated. We will see a re-allocation of spending away from the stay-at-home paradigm. He believes a large portion of the workforce will be back in the office by the end of 2021. He is not touching cruising and airline companies. These will be the last to recover. Restaurants and hotels will really benefit in 2021 as the economy re-opens.

Markets sold off today off recent record levels. It's easy to view the most bullish stocks recently as continuing their run in 2021, like Tesla. You rarely go wrong buying stocks like this on down days--but this is short-term. We want stocks that stand the test of time--a year and beyond--stocks that grow more enticing with time. It's a longshot Biden will raise taxes. Also, it's okay to take some profits. A third vacccine should be approved soon, but we're doing a horrendous job disseminating vaccines. The White House has dropped the ball.

Looking back on 2020. He's grateful to have made it through one of the most tumultuous years in quite a few. A year ago, who would have thought the virus would make economies a shell of their former selves. He's not sure the shell is going to be rebuilt anytime soon. At the same time, you wouldn't have believed that indexes would be reaching new highs. The market isn't always going to interpret facts in the most obvious way.

Looking ahead to 2021. Interest rates will be a determining factor. If interest rates go up again, the asset classes that have benefited from low rates will be vulnerable. Impacted will be everything from real estate to French wine to equities. A year from now, we could be discussing new record highs and the biggest economic boom in living memory, but it will depend on interest rates.

How to step into the stock market upon retiring? Just add money a little bit over time, and invest that way. Mutual funds are still a fabulous way to diversify. We're all going to live longer than we expect. Very important to have your savings grow into retirement. Monthly contributions are a way to do that. It will give you the safety you're looking for through dollar cost averaging.

What are you expecting in the first half of 2021 with the Biden presidency? Valuations are not cheap across the board, so it's harder to deploy new capital than to hold existing winners. Largely, the setup is optimistic for 2021. It's one of the risks that everyone is so positive. Covid is an ongoing problem. Positive vaccine news makes investors see a return to normal. Biden presidency should continue to support equity markets, though there is a possibility of higher taxes. Balance of power should hinder sweeping changes, and this will protect corporate profits. Fiscal and monetary policy are positive drivers to boost growth coming out of this pandemic and keep interest rates near zero.

What ambushes are you worried about in 2021? When everyone's on the same end of the boat, the risk is that market participants become complacent. Valuations could get extended, and then any little trigger makes investors reassess. He's keeping an eye out for excesses.

What worries him is that we all have the same consensus for 2021: more vaccinations lead to more economic recovery to trigger pent-up consumer demand as all central banks keep rates low and governments uphold stimulus, and so markets continue to rise. But he sees a risk: if the economy picks up steam, how long can interest rates stay low and will they rise? He's sticking with industrials, energy, banks--recovering cyclicals. He's cautious about tech. Can the Fed hold interest rates this low? He wonders. Yes, a dip is possible in the coming quarter, but nobody can time these things. Expectations are so high and markets are currently overbought. Don't time a dip, but stick with the names you know. Conversely, we won't see another 2020 recession for some time. It's still a good backdrop for investing, despite a possible 10-15% pullback, but that pullback means we return to levels a few months ago.

[Today's Market Call did not air and instead BNN aired a Bloomberg show, "Balance of Power", covering US politics.]