Who spends vs. who saves helped shape the most recent stimulus bill, and is likely playing a role in framing the expected tax-law changes. Notable Number 2 in this week’s Weekly Market Review details how much of the expected recent stimulus package will be spent on imported goods. Also attached is the Weekly Market Recap provided by JP Morgan. In the “Chart of the Week” and corresponding “Thought of the Week” you can see the comparison of spending vs. saving for those in the top 10% of income vs. everyone else. Lawmakers strategically crafting policy by understanding the money habits of different groups of people is pretty smart, and also pretty sneaky.
When it comes to investing money, it is tempting to invest in what has done well recently. Seeing something do well instills confidence that investing money into that is a winning proposition. Likewise, it is very hard to have confidence in investing into something that has performed poorly. In 2020, the worst performing part of the market was the energy sector, losing 34%. Energy is the best performing sector so far in 2021 rebounding 34.8% as charted on the bottom right section of the JP Morgan Recap . Our emotional bias or feelings, about what we like or are afraid of, when it comes to investments, can often times lead us down the wrong path. Those who can remove the emotions from investing often fare the best in the long-run.
As always, we hope you find the Weekly Market Review both informative and interesting.
Have a nice week!
Trevor N. Coe, CFP®