Insights

Warren Buffett states, “In the business world, the rearview mirror is always clearer than the windshield.” And even though investors are constantly bombarded with the standard compliance warning that past performance is no guarantee of future performance, it should come as no surprise that many can’t help but chase the hottest asset class, sector or stock, often to their financial detriment.

In this Special Report, we discuss Morningstar’s rating system and remind that we think the best advice is to find a strategy with a history of success (Value and Dividends, perhaps?) and stick with it through thick and thin!

Nothing ever goes exactly as planned, but the first half of ’21 for the U.S. equity markets went even better than most would have hoped. To be sure, as we wrote in December 2020 in our Market Outlook (Where to Invest in 2021), we thought the year would be favorable for equities in general and inexpensively priced stocks in particular.

Such was the case over the first two quarters of 2021, but Value has taken a bit if a breather since the advent of summer, which we think affords another opportunity to add undervalued stocks to portfolios. In addition to the seven investment themes we highlighted at the end of 2020, we have just added three more in our latest Special Report entitled Where to Invest in 2021 – Mid-Year Update.

We think the tax rate analysis is eye-opening and, as is often the case, we believe it supports an emphasis on Value stocks in one’s asset allocation mix. We like the perspective offered by Vannevar Bush, “Fear cannot be banished, but it can be calm and without panic; it can be mitigated by reason and evaluation,” and we think this quick-read report is well worth a look.

We even offer a listing of 10 undervalued stocks that are already paying an elevated tax rate, suggesting that their bottom lines might not be so heavily impacted by a hike in the corporate tax rate.

As the 2020 presidential election campaign heats up and polls show Joe Biden holding a lead of 7.5 points (49.2% to 41.7%) over President Trump, while the betting odds suggest a tighter spread, we must caution that the race is far from over. Indeed, pollsters and oddsmakers are hardly infallible as just four years ago, Hillary Clinton led Donald Trump in the presidential race by four or five percentage points one month before Americans cast their ballots. Market historians, and perhaps everyone, should be thrilled to see the page turn to 2021, even as the winner of the Oval Office will still be dealing with COVID-19, as well as political and economic uncertainties.

In this report, we identify a few of the most common events which have historically caused temporary market disturbances. These events could easily deter you from staying on track with your long-term investment plan. But historical data suggests that doing nothing can be the best course of action.

Whether we end up with an incumbent victory for the Republicans or a transition to a Democrat in the White House, our political platform always starts and ends with recommending a diversified portfolio of what we believe to be undervalued stocks.