coronavirus, like the consumer sector, health care, and technology. If we get a vaccine or more signs appear that we have been able to contain the crisis sufficiently, then we will have greater confidence in other parts of the economy as well.


Industries such as construction, semiconductors, auto manufacturing, and medicine should not see any negative long- term effects from the coronavirus. Tese sectors should continue to build on the success from 2020. However, some sectors that came tumbling down, like business travel, bricks-and-mortar retail, and cruise lines may never return to pre-COVID levels.


Rebuilding will not necessarily be easy in 2021. Since bottoming in April, Main Street’s recovery has certainly lagged Wall Street’s recovery. With more than half of U.S. businesses being small businesses and unemployment still above 8%, consumer spending could take a hit if expanded unemployment benefits are not extended by Congress.


Tere is also the risk of another surge in COVID-19 cases heading into winter. If there is a new round of stay-at-home orders or increased restrictions on economic activity, the recovery could quickly reverse course. Many state and local budgets are already vulnerable, which means any new lockdowns could lead to a reduction in services and many layoffs.


Despite these potential challenges ahead, we expect the U.S. markets to have a relatively modest year in 2021. With U.S. stock valuations remaining high, there may be opportunity for value overseas, particularly in Europe, Japan, and the emerging markets. No matter where opportunity knocks, until COVID-19 is in the rearview mirror, we expect a slower growth, low-interest-rate, and low- inflation world to persist.


Of course, fixed income investing in a low ambassadoradvisors.com • 5


interest rate world will present challenges. Treasuries offer some safety, but very little return. Corporate bonds should continue to offer better return prospects. Te upper quality parts of the high-yield market also offer attractive returns. However, traveling too far down the quality curve could become problematic, especially for sectors and industries with a more uncertain outlook in a COVID-19 world.


Companies that pay dividends should continue to be in greater demand next year, especially if interest rates stay low. A steadier economic environment could also provide investors with greater confidence that companies will be able to maintain their payouts leading to greater demand as well.


Overall, we expect the economy and markets to keep progressing, log by log, as we rebuild. No great structure is built overnight. It takes time, discipline, and patience. Tat is what our investment team is here for: to help you build a solid portfolio that can help you achieve your dreams and goals.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16