Vaccine Hopes Overshadow Shaky Recovery December 7, 2020 Weekly Update Print Please note: This update was prepared on Friday, December 4, 2020, before the market’s close. Despite mixed economic data suggesting the recovery is slowing, the S&P 500 inched further into record territory on a slew of good news: Vaccines may be available to health care workers by year’s-end and lawmakers have edged closer to compromise on a new coronavirus aid package. The month just-ended was a November to remember by any stock-market measure. The Dow Jones Industrial Average, an index of 30 leading American companies, notched its best monthly performance since 1987. The MSCI ACWI index, a measure of stocks worldwide, rose 12.4%, the best monthly gain in its 30-year history. The small-stock Russell 2000 index was up 18.4%, setting its own record. We’re surprised at how robust the rally has been—but we’re not going to try to second-guess it. You shouldn’t either. As we constantly advise, a disciplined, unemotional approach is the key to long-term investment success. Through Thursday, the Dow Jones Industrial Average was up 7.4% for the year, while the broader S&P 500 index was up 15.5%. The MSCI EAFE index, a measure of developed international stock markets, is up 5.2%. As of Thursday, the Bloomberg Barclays U.S. Aggregate Bond index’s yield stood at 1.18%, down from 2.31% at the end of 2019. On a total return basis, the U.S. bond market has gained 7.1% this year. Job Gains Falter Proving once again that economists are good at generating predictions but bad at actually getting them right, the labor market slowed much more than expected in November. Employers added just 245,000 jobs last month—less than half the 610,000 jobs added in October and the smallest number since the U.S. recovery began in May, according to the Labor Department. The unemployment rate fell slightly to 6.7% from 6.9% in October, but the economy continues to bleed jobs in retail, restaurants, hotels and airlines. With COVID-19 cases at all-time highs in the U.S. and the winter months approaching, the service sector—the biggest employer of Americans by far—faces significant hurdles ahead. Source: Bureau of Labor Statistics. Holiday Shopping Steady, But Different If the labor market’s recovery is losing steam, it hasn’t stopped people from spending. U.S. consumers, and the businesses that cater to them, have learned how to adapt to social distancing measures, and so far that’s carried over into the holiday shopping season. According to Mastercard, retailers saw sales rise 3.1% year-over-year in November, with e-commerce numbers up 53% compared to November 2019. Cyber Monday was the biggest online shopping day in U.S. history with $11.4 billion in sales. Online revenues were so robust that UPS ordered its drivers to stop collecting packages from six mega-retailers, including Nike, electronics specialist NewEgg and apparel giants Gap, Macy’s and L.L. Bean, who were trying to ship more packages than carriers had agreed to pick up. The S&P 500’s Hot Streak With data suggesting slowing growth and a pandemic-riddled global economy, it’s hard to believe that the S&P 500 has hit 28 all-time highs this year—with more than half of them since August. What gives? We chalk it up to expectations for improving earnings going into 2021 and rising confidence that the vaccine’s distribution is imminent. That doesn’t mean we’re sounding the all clear: The vaccine’s rollout will be long and complicated. Yet, the momentum from positive vaccine developments is a sign that there is light at the end of the pandemic’s tunnel. Still, U.S. COVID-19 deaths hit grim new daily milestones this week with a long winter approaching. We’re reminded of the words of the recently departed Rabbi Jonathan Sacks: “Optimism is the belief that things will get better. Hope is the belief that, together, we can make things better.” Let’s hope that we, as a nation, can come together to defeat this scourge. Podcast: Making Tactical Practical—An Introduction to Tactical Investing Tactical investment strategies may seem confusing or complex; there are a lot of misconceptions about how they work and how they fit into a long-term investor’s portfolio. We’re here to clear things up. Join Director of Research Jeff DeMaso and Quantitative Investments Manager Josh Jurbala for the first part of our multi-episode look at tactical investments. They explain the terminology and provide an engaging overview of this ever-evolving investing methodology. In this insightful conversation, Jeff and Josh discuss: What do we mean by “tactical,” exactly? The difference between quantitative and fundamental investment analysis Who should invest in tactical strategies? Are these strategies just market-timing? How Adviser Investments’ tactical portfolios operate … and much more This disciplined, rules-based investment approach offers a solution for investors seeking to remove the emotional component from decision-making in their portfolios. Tactical isn’t for everyone. Is it for you? Click to listen now! Financial Planning Focus: Planning in Your 30s Say goodbye to canned tuna and ramen and hello to the appearance of a gray hair or three: As you enter your 30s, your near-term responsibilities and long-term obligations expand. Starting a family, contemplating homeownership and earning enough money to consider investing all come with the territory. As you move into some of the most exciting years of your life, here are five tips to help you get started on the path to securing your financial future: Don’t Forget the Fundamentals. Many of the same financial planning basics from your 20s still apply: Have an emergency fund with six months of household living expenses set aside Allocate at least 10% of pretax income to retirement through a 401(k) plan or other retirement saving vehicle Build a healthy credit history (pay off your balance every month) and monitor your accounts for credit card fraud Take advantage of any and all benefits available to you through your employer Protect Your Assets. As your earnings and assets grow, protecting them becomes more important—and that means making sure you have adequate insurance. Disability insurance can help protect your salary if you are unable to work. And life insurance can help provide for your loved ones’ future if you pass away. For further guidance on figuring out how much insurance you should have, please read our article on life insurance and listen to our podcast episode on insurance needs. Manage Your Debt. Whether you’re hoping to buy a home or simply struggling to pay student loans, getting debt under control is a crucial component of budgeting for most 30-somethings. One rule of thumb we like is the “36-28-20” method. The rule suggests keeping total debt below 36% of your total gross income, housing expenses (mortgage/rent/taxes/insurance) below 28% of your gross income and credit card debt and other loans below 20% of net income. (This can be more difficult if you live in an expensive city.) Plan for the Worst. If you were in an accident, who would take responsibility for making your health care and financial decisions? How would your car loan and mortgage get paid? If you have children, who would take care of them and would they have sufficient funds to do so? A proper estate plan will provide answers to these questions. Some resources you might want to consider include our Estate Planning Checklist as well as our report and podcast episode on how to find the right estate attorney. Keep Dreaming Big. Your 30s are a time to work toward your dreams. Whether that means owning your own business, sending your kids to college or ultimately retiring to a beach in Bali, this is the time to call in an experienced financial planner to customize a road map to help you achieve your lifelong goals. These five tips are applicable to anyone in their 30s. But it’s also important to recognize that everyone’s situation is unique—that’s why we offer detailed financial plans to our clients at no extra cost. If you would like our help to make sure you or a loved one have checked the right boxes for a financial plan, please contact your portfolio team. We’ve got your back. Strategy Activity Update Please see below for a summary of the trades we executed over the week through Thursday and our current tactical strategy allocations. Dividend Income No trades this week. AIQ Tactical Global Growth Sold Fidelity MSCI Utilities Index (ticker: FUTY); bought Fidelity MSCI Communication Services Index (FCOM). AIQ Tactical Defensive Growth No trades this week. AIQ Tactical High Income No trades this week. AIQ Tactical Multi-Asset Income Sold Vanguard Intermediate-Term Corporate Bond ETF (VCIT); bought Fidelity Corporate Bond ETF (FCOR). Adviser Investments’ Market Takeaways You can find two new Market Takeaways videos on our website. Research Analyst Liz Laprade spoke about Tesla’s upcoming inclusion in the S&P 500, and Vice President Steve Johnson discussed what he’s seeing for fixed-income investors as the yield on high-yield bonds hits an all-time low. Looking Ahead Next week brings relatively few market-moving reports. Still, we’ll be looking closely at reads on inflation, consumer credit, job openings and consumer sentiment. As always, you can visit www.adviserinvestments.com for our timely and ongoing investment commentary. In the meantime, all of us at Adviser Investments wish you a safe, sound and prosperous investment future. About Adviser Investments Adviser Investments is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994, and have more than 3,500 clients across the country and over $7 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. Our minimum account size is $350,000. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868. Please note: This update was prepared on Friday, December 4, 2020, before the market’s close. This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Purchases and sales of securities listed above represent all securities bought and sold in each strategy during the period stated. Each strategy’s portfolio generally includes more holdings in addition to the transactions listed above and in some cases the securities listed above may only represent a small portion of the particular strategy’s complete portfolio. Further, the securities listed above are not selected for listing based on their investment performance; thus it should not be assumed that any of the securities listed above were profitable or will be profitable, nor should it be assumed that future recommendations will be profitable. Clients and prospective clients should only make judgements about a strategy’s performance after reviewing the strategy’s composite performance information. There is no assurance that each security listed above will remain in the strategy’s portfolio by the time you have received or read this email. Securities are listed for informational purposes and are not intended as recommendations. Existing investor accounts may not participate in all transactions listed above due to each account’s particular circumstances. Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. 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