Monday Morning Market Insights: Last Week in Review with Rusty Vanneman, Vol. 1

Happy New Year!  2021 is already shaping up to be a great one. While it’s likely to be another roller-coaster ride in the stock market, the economy is poised to more likely than not have a strong year of growth.  

So What Happened Last Week?

The global stock markets had a nice week last week to finish a historic year, with emerging market stocks leading the way (+3%+ gains).  Small caps, which have market leaders in recent months, actually had a small loss on the week. To recap 2020 stock market performance, the global equity market was up over 16% and U.S. stocks were up about 20%.  Despite market leadership appearing to change mid-summer, Growth still whupped Value by nearly 50% in 2020. 

Bitcoin also had an amazing week and year as a whole. There’s talk again of a cryptocurrency ETF. This is a roller-coaster for the big kids, but not for the whole family yet. 

And Did You Know?

Growth stocks are up about 20% per year (give or take 5%) over the last 3-, 5 and 10-year time frames. Extraordinary.   

Parts of the market that “underperformed” over the last decade still outperformed their long-term average returns during this time. For example: Value was up 9-10% per year over the last 3- and 5-years, while Small Caps were up 11-12% over those time frames. International was up 9% per year over the last 5, though was up only 5%/year over the last 10*. 

The only clear underperformer was the over-all commodity asset class, which even lost 5%/year over the last 10.   Wow. When the tide turns for real assets, look out.  There’s a whole lot of mean reversion it needs to do to catch-up. 

What’s Coming Up?

As we start the month, the stock market has a few strong positives in its favor, including positive price momentum and the seasonal factor of market strength in January.

That said, there are catalysts for volatility.  Arguably, this week’s biggest event is the Georgia Senate runoff election, as it will decide which party controls the U.S. Senate. The market has for the most part priced in a Republican win. Expect volatility if the result is different. 

While the formal acceptance of the Electoral College vote on Wednesday is a lower probability event for volatility, some good investors are still concerned about it. Nonetheless, strategists expect the vote count to confirm Biden’s presidency.

Regarding economic data, the December employment report caps a big week of data on Friday, and some economists expect less than 100,000 jobs were created, compared to 245,000 in November.

What About the Fun Stuff?

Personally, I love this time of year with all the “Top 10” lists for music and movies. My very favorite, however, is Spotify’s personalized “Your Top Songs of 2020.” 

My top 5 songs listened to last year were from Blonde Redhead, Palace, Orville Peck, King Creosote, and Porridge Radio.  Sufjan Stevens was my most played artist. Who was your most played artist in 2020? Check out Spotify!

In college football, Ohio State looked very impressive beating Clemson. Alabama-Ohio State should be a great national championship game on January 11th. Go Big Ten!

Then again, why am I talking college football? Orion’s primary offices are all near college basketball powers: Villanova ranked #3 (USA Today), Creighton #10 and Xavier #20. The Big East is strong. 

Have a great week! For more insights and commentary, visit our Financial Advisor Success Hub.

 

*Morningstar data

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The CFA is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute — the largest global association of investment professionals. To learn more about the CFA charter, visit www.cfainstitute.org.

The CMT Program demonstrates mastery of a core body of knowledge of investment risk in portfolio management. The Chartered Market Technician® (CMT) designation marks the highest education within the discipline and is the preeminent designation for practitioners of technical analysis worldwide. To learn more about the CMT, visit https://cmtassociation.org/.

About Rusty Vanneman, CFA, CMT, BFA
Rusty Vanneman serves as the Chief Investment Strategist for Orion Advisor Solutions. An industry veteran with more than 30 years of investment experience, Rusty creates relevant market- and platform-related content that supports deeper, more engaging conversations with advisors and investors, educating key internal and external audiences on Orion Portfolio Solutions’ strategies and resources to help deliver favorable investor outcomes, and helps identify new investment offerings to meet growing marketplace demand.  Rusty is a host of Orion’s The Weighing Machine weekly podcast, Orion’s monthly Weighing the Risk podcast, and authored the book “Higher Calling: A Guide to Helping Investors Achieve Their Goals.” Rusty has managed multiple mutual funds and hedge funds during his career and was named one of the Top 10 Portfolio Managers to Watch by Money Management Executive.* Prior to Orion’s acquisition of Brinker Capital in 2020, Rusty was the Chief Investment Officer for Orion Advisor Solutions and prior to that was the President and Chief Investment Officer of CLS Investments.  Before joining Orion in 2012, Rusty served as the Chief Investment Officer and Managing Director for a multi-billion-dollar registered investment advisor (Kobren Insight Management) in the greater Boston area. His 11-year tenure at the RIA included a five-year span when the firm was owned by E*TRADE Financial where he also served as the Senior Market Strategist for E*TRADE Capital. Prior, Rusty was a Senior Analyst at Fidelity Management and Research (FMR Co) in Boston. Additional work experience includes Thomson Reuters, General Electric, and as a cattle ranch hand in the Nebraska Sand Hills. Rusty received his Bachelor of Science in Management from Babson College in Wellesley, Massachusetts, where he graduated with high distinction. He holds the Chartered Financial Analyst (CFA®) designation and is a member of the CFA Institute. He is also a Chartered Market Technician® (CMT) and is a member of the Market Technician’s Association (MTA). He is also a Behavioral Financial Advisor (BFA). *RUSTY VANNEMAN MONEY MANAGEMENT EXECUTIVE AWARD. Rusty Vanneman, CFA, CMT, was selected as a “Top 10 Fund Managers to Watch” in 2017 by Money Management Executive. Money Management Executive is an unbiased, third-party publication covering the asset management industry. Money Management Executive chose the list of managers to watch by screening Morningstar data from funds with a single manager, ranked as having the best three-year annualized returns in their respective categories. The list of managers was published March 27, 2017. Money Management Executive is not affiliated with OPS. Ratings and awards may not be representative of any one client’s experience and are not indicative of OPS’s future performance.