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Oakland, CA | Piedmont; The Current State of the Stock Market and U.S. Economy

BY: ALISON VAN DYKE, FIRST AND MAIN FINANCIAL

Hi, I’m Erik Wolfers. I’m the founder and managing member of First & Main Financial. We’ve been helping clients with perfectly personalized financial solutions since 2001. Today, I want to talk just a little bit about the the current tone of the stock market.

We are still in the middle of a global pandemic, with vaccines starting to be distributed but not yet widely distributed. Many industries are still hurting, like travel and leisure, local restaurants and gymnasiums—those kinds of things where you don’t want to be gathering inside.

Last year was a fantastic year for the stock market. Our leading fund was up approximately 60% and we had some funds that were up in the high 20s and above 30% returns for the year—which is highly unusual. The long-term rate of return for the stock market is closer to 10%, depending on when you look back in history.

We preach long-term investing and patience—a couple years ago returns may have been a little bit below average and now returns are back to something near average or above-average, depending on when a client had started with us. It’s hard to reconcile the success of the stock market in the face of a global pandemic and the unemployment rate that we’re experiencing in the United States. We did come into the pandemic in one of the best economic environments in the history of the United States. It was actually the best economic environment in over 50 years, which is a long time. Unemployment was below 4% before the pandemic, which is highly unusual.

Last year some baskets of stocks, like tech stocks did even better. IPOs did really well. Times like this have never lasted in the past. There’s usually some sort of reconciliation, a coming back to reality on the valuation of stock and the future prospects of stocks.

We’ve had an unusually long period of time where large stocks and big companies in the United States have out performed most other types of stocks around the globe. Given the pretty high valuations of large US stocks on a historical basis that we have right now, we are experiencing somewhat of a rotation into other baskets of stocks: smaller stocks, value-oriented stock, stocks outside of the United States. This is normal. Rotating from one sector to another happens based on valuation; which is part of the reason why we generally have money overseas for our client’s and also in small cap and value stocks—because during different times different baskets will outperform.

It’s still a challenging time for many people, but the stock market is doing well at this particular moment. There’s no economic trouble necessarily on the horizon. Hopefully we will be recovering well once inoculations continue—but for now it’s good time to be in the stock market, and some people maybe have made more than they ever imagined. Maybe it’s a good time to give some of your money away to somebody else who needs it more.

If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.

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“Best Financial Advisor in Piedmont, CA”

Top Rated Local Financial Advisor / Planner

East Bay Area: Piedmont, Oakland, Berkeley, Alameda, Orinda, CA

CityScoop is the top ranked local business news network in the United States. Established in 2008, CityScoop has been providing local communities with high quality news about local businesses and their most recent projects.

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ALISON VAN DYKE

FIRST AND MAIN FINANCIAL

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235 Wildwood Avenue,
Piedmont, CA 94610, USA

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235 Wildwood Avenue,
Piedmont, CA 94610, USA

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ABOUT THE AUTHOR

BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.

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Oakland, CA | Piedmont; The Current State of the Stock Market and U.S. Economy