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We hope you find the articles on our blog informative and helpful. You are always welcome to chat with us if you have any questions about your personal financial situation.

Market Trends for 2021

First of all, Happy New Year to you! May we all look forward to seeing COVID in the rear mirror at some point in 2021. No doubt, getting enough of the population vaccinated will take longer than we all hope, but it will happen and science will help us put COVID behind us. There is a known variant circulating, first identified in South Afria and then in the UK and Europe and now in the USA. While it is not certain whether the current vaccines on the market account for this variant, they will find a vaccine for this one too if the current vaccines do not.

Due to the inevitable mutations of viruses, it is quite possible (but still unknown) that we may need to get a COVID vaccine each year to ensure we have maximum protection from potential variants. While this is something none of us look forward to, it is no doubt better than the alternative. Obviously medical science is far from perfect and there will always be a small percentage of people who have adverse events to any vaccine. However this is just about the case with every medicine on the planet. The majority will benefit.

The certainty of a vaccine alongside a more unknown supply and vaccination schedule means it is just a matter of time before we return to a new normal. How much time is the unknown.

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Happy Holidays!

We want to take this opportunity to wish all our clients and readers a Very Happy Holiday!

There are 6 Trillion reasons and counting why 2021 is shaping up to be a positive year for many asset classes.

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What the SPAC! What Is It & Why Is It So Popular?

So, what is a SPAC? And why is there so much market talk about these?

SPAC stands for "special purpose acquisition company". It can also be referred to as a “blank-check” or “shell" company. Essentially, a SPAC is a publicly traded company formed by a group of investors with specialized experience in an industry who are looking to acquire a target company, essentially taking a private company, public. Until it acquires a company, the SPAC does not have any revenue or operational business. Essentially it raises money which stays on the balance sheet until a target acquisition has been negotiated.

There are two weaknesses that can be attributed to SPAC's.

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The Huge 2020 IPO Wave And What It Means for 2021

While COVID, the Stock Markets and yes, the election, can claim the most headlines this year, a lesser known headline is playing itself out in 2020, namely the resurgence of IPO's or Intitial Public Offerings with huge gains out of the gate. A cousin of this trend is the emergence of SPAC's (special purpose acquisition companies) which we will touch on more in a future blog article.

AirBnB debuted today as the biggest IPO of 2020. It ended up offering 52 million shares for sale at $68 each which was significantly above their December 1st target of around $44 to $50 per share. The shares (ABNB) started trading on the Nasdaq today at $146 per share rising to $160 per share valuing AirBnB at more than $110 billion. That is 12.5% of the total value of IPO's this year which have included DoorDash (DASH), Palantir Technologies (PLTR), Asana (ASAN) and others.

Yesterday, DoorDash (DASH) Pre-IPO shares which had sold at $102 a share, debuted it's first trading day at $182 per share rising to over $195 valuing the group at over 70 Billion dollars. These are lofty valuations for companies yet to turn a profit. If you are investing for quick profits you better have a clear game plan form the outset.

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The US Dollar - 2020 Trends & Beyond

We are dedicating todays Blog article to the US Dollar and how it has been tracking almost inversely to the US stock market this year. At the height of the COVID onslaught in March and April of 2020, we saw a steep rise in the US dollar to a new 3 year high as investors rushed to safety in the worlds reserve currency while US and global markets fell in rapid succession as the impact, risk and global spread of COVID was priced into the markets. Conversely, as stock markets rallied back to their pre-COVID highs we have seen the dollar steadily fall. A vast injection of liquidity by the Federal Reserve which dwarfed Bernanke's quanititative easing during 2007-2009 eased concerns, risk and pressures on the financial system which in conjunction with close to zero interest rates has fuelled a wave of money seeking higher yields.

At some point in the future, the Fed will reign in its uber generous bond-buying and liquidity injections. However, that point is unlikely to arrive in the next two years which means that investors appetite for seeking yield is unlikely to taper off until that point. An IPO boom coupled with strong market growth is likely to continue into 2021 not-withstanding any new black swan events.

A weaker dollar eased conditions after the 2007/8 financial crisis and it appears that this trend will be mirrored in 2021/2022. We expect the US economy to pick up considerable steam as we come out of a brutal 2020/2021 Winter and optimism around emerging post-COVID lifts people's spirits and business investment. A strong US economy coupled with a weaker dollar and close to zero interest rates should provide the impetus for the stock market to perform well.

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Hawley Advisors
1600 South Main Street, Suite 190
Walnut Creek, CA 94596
Phone: 925-906-9800
Fax: 925-906-9884
info@hawleyadvisors.com

 

 

Hawley Advisors is an investment advisor, registered with the State of California. Any investment ideas or strategies on this website are for the purposes of education and general information only and should not be construed as specific investment advice. For more information about our firm please check the SEC Public Disclosure website: https://www.adviserinfo.sec.gov/

 

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