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David L. Blain, CFA, is CEO and Founder of BlueSky Wealth Advisors, and author of “Invest in Your Life, Not Just Your Portfolio.”

In this three-part episode of his on-going series, 2021 Financial Forecast, David L. Blain, CFA, takes a closer look at capital market expectations in the upcoming year. What does capital market expectations mean? In short, he explains his prediction of how the stock and bond markets will perform and the possible implication for your portfolio.  

2021 Financial Forecast Series | Capital Market Expectations | Part 1

Highlights in Part 1:

0:00 – 0:40 | Introduction

0:41 – 5:14 | Stock Market Expectations: The Wild Ride of 2020, Stock Returns Post COVID, Positive Stock Year, Lower than Average Returns, High Stock Valuations, Low Inflationary Environment, Low-Interest Rates, Stock Tilts

5:15 – 7:26 | Risk: What is Risk in the Financial World? The Volatility of Return, Risks in the Stock Market, Rational vs. Irrational Levels of Risk

7:27 – 9:16 | Global Stock Return Rates, Longevity of Rates, Market Predictability, Lower Projected US Rates, Higher Global Returns, Higher Dividend Yields

9:17 – 9:54 | Currency: US Dollar Projected Weakening Against Foreign Currencies

9:55 – 10:26 | Drivers of Return in US Markets: Positive on Earnings Growth

10:27 – 11:51 | Drivers of Return in US Markets: Negative Price-to-Earnings Compression

11:52 – 13:34 | Driver of Return in US Markets: Economic & Presidential Cycles

13:35 – 17:15 |Estimating Returns, Total Earnings Growth Rate Formula, Predictability of Returns

2021 Financial Forecast Series | Capital Market Expectations | Part 2

Highlights in Part 2:

0:00 – 1:48 | US Large Companies (FANMAG) Historically Driving the Market, Emerging Markets Growth Prospects and Dividend Yield, Value Companies Taking Over Leadership of Market, Small Company Growth

1:49 – 2:24 | Energy Demand in the Economy, Energy Market Growth and Recovery Amidst Overall Market Recovery

2:25 – 3:42 | “Tilting” Your Portfolio

3:43 – 5:07 | Corrections: Probability of Correction in 2021, Reduced Volatility

5:08 – 11:06 | Bonds: Continued Low-Interest Rates, Low Bond Returns, Similarity to Stock Market, Hedged Bonds, Foreign vs. US Bond Returns, Bonds in Portfolios, TIPS

2021 Financial Forecast Series | Capital Market Expectations | Part 3

Highlights in Part 3:

0:00 – 1:51 | Commodities: Us Dollar, CRB (Commodity Research Board) Pricing, BlueSky Commodity Philosophy

1:52 – 2:58 | Gold: Uptrend to Continue, Inverse Relationship with Dollar Strength, Best Time to Invest

2:59 – 4:33 | Bitcoin: Wild Ride, Speculative Investment, Large Companies and Wall Street Investment Banks Beginning to Allocate Funds to Bitcoin, Definition of Investment

4:34 – 6:04 | Portfolio Implications: Lower Returns on Equity, Reversal of Large Cap Technology Dominance Reversal, Receding Volatility, Reiteration of Supply & Demand, Cash Coming Back into the Market from the Sidelines

6:05 – 7:22 | Tilts in the Market: More Return in Foreign, Emerging, and Small Markets; Public REITs Recovery

7:23 – 8:02 | Fixed Income: Overweight Tilt Towards High Yield, Neutral on Term, Continuing Allocation of TIPS, Fixed Income over Cash, Elevated Risks in 3rd & 4th Quarter

8:03 – 10:40 | COVID Recovery, Biden Agenda, “All Things Green,” Hospitality Industry Recovery, Green Energy Theme, and Opportunity

10:41 – 11:50 | Biden Administration: COVID Relief, Infrastructure, Health Care, Energy, State Budgets Look to Cannabis and Sports Betting

11:51 – | Putting It All Together in 2021: Summary and Closing Sentiments

Next Episode: 

Tax Reform | Episode 5 – Click here to view.

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