Stimulus, Finally!!!

Stimulus, finally!
Tesla – S&P 500
The Fed staying all in!
Market Thoughts

Looks like we’ll finally receive another stimulus, as lawmakers have compromised a package around $900 Billion.  Much smaller than the original 2.2 TRILLION proposed a few months back.

The details should be known this week however appears most people will receive a direct payment of $600 and also $600 per childUnemployment has been expanded, adding an additional $300/week.

The Paycheck Purchase Protection Program will provide $284 Billion for small businesses.  So many restaurants and other small businesses are in desperate need!  $30 Billion to go toward vaccine distribution, $82 Billion to schools and colleges, $25 Billion for rental assistance and $15 Billion for the airlines.

So, will we get even more stimulus?  I believe the answer is yes however the amount in 2021 will depend on the outcome of the Senate run-off on January 5th.

Tesla added to S&P 500

I have great respect for Tesla as a company.  I solute Elon Musk’s creativity and ingenuity.  I must question however the logic of adding Tesla now?  The stock is well over $600/share, near it’s all time high.  The stock is up this year by over 700%.  The P/E ratio is over 1300!!

Hoping the experts are correct and Tesla will keep increasing car, battery and technology sales rapidly to justify the current nose bleed valuation.

Fed Staying All In!

Federal Reserve Chairman Powell last week stated the Fed will continue purchasing bonds to the tune of $80 Billion of US Treasuries and $40 Billion of mortgage-backed securities per month, “until substantial further progress” is made toward full employment and price stability.

Reading an article from Pimco on Sunday suggested the buying pace will last through late 2021.

At this point we know the Fed will stay all in, & Congressional monetary support (tax dollars) will keep coming.

Market Thoughts

This certainly has been, and will continue to be a challenging environment to navigate your portfolio.

So many IPO’s coming out, obtaining stock valuations that are in the nose bleed section.  The stay-at-home stocks are priced as if we’ll never get out, and the world is permanently changed.  Many of the stocks that were beat-up the worst, such as airlines and energy, are starting to recover quickly.

Please keep in mind when listening to various “professionals” suggest the direction of the markets, many are filled with rather significant bias.  For example, a stock portfolio manager being interviewed on CNBC is not going to say the stocks in their portfolio will not do well and may be out of favor for now.  That would be crazy and far too honest!!

Going forward, it is prudent to make sure the funds you need for current income purposes are secured and the balance of your portfolio is properly diversified and positioned based upon YOUR circumstances.

For non-clients, if you would like to discuss your portfolio, now is a great time.  To arrange a truly complimentary review, please click here.

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Paul Levin CFP®, ChFC®, RICP®

Retirement Income Certified Professional®