Your Money

The start of the new year has been met with broad weakness across U.S. stock indices as investors digested receding monetary and fiscal liquidity, persistent effects from COVID-19, and a rise—but potential eventual easing—in inflationary pressures. The areas undergoing the most intense selling pressure are the speculative areas of the market, which all gained incredible steam in 2020 and the early part of 2021.

Stocks within “frothier” segments—unprofitable tech companies, companies hit by short-sellers, special purpose acquisition companies (SPACs), newer initial public offerings (IPOs), and retail crowd favorites—have weakened substantially over the past year and are now lagging the S&P 500® Index.

The collapse in performance isn’t shocking if you consider that some of these stocks had outpaced the S&P 500 by triple-digit percentage points (on a rolling 12-month basis) by early 2021. Given the Federal Reserve’s plans to tighten previously accommodative monetary policy, the prospect of higher interest rates has dented the performance outlook for companies with elevated stock valuations and/or weak fundamentals.

At PWM, we expect more bumps in the road for the speculative and expensive areas of the stock market, therefore, favor companies with strong balance sheets, fundamentals, and cash flow.

Schwab Market Perspective: Bumps in the Road
by Liz Ann Sonders, Jeffrey Kleintop, Kathy Jones

Your Life

We just passed the Winter Solstice, the date of the longest day of the year when darkness reigns. The day after, the length of daylight will increase more and more each day. The rule of thumb is that we gain about 2 minutes of daylight each day until Summer Solstice. Although we are in the “gaining more daylight” phase, it will take time before we really see a lot more daylight in our days. In addition, this is the Winter months when cold weather zaps our energy, and we spend more time indoors.

If you start to feel blue triggered by the combination of changes in daylight and weather, you’ve got the classic symptoms of Seasonal Affective Disorder, with the apt acronym of SAD. Up to 20% have a mild form of winter blues. However, don’t be alarmed if you feel that you need help in managing SAD. There are options you can consider that range from seeing a doctor for medication to getting more light or stimulants to changing your schedule. See what works best for you while you wait for spring and summer. 

14 Ways to Ease Seasonal Depression
by Beth W. Orenstein and Michelle Pugle

Complexity Simplified

Trivia