Riverfront April 12, 2021
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Know Your Fixed Income Neighborhood

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Riverfront April 5, 2021
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Quarterly Review: 2021 Opens with a Changing of the Guard

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Interest Rates and Inflation March 29, 2021
Downloads: Interest-Rates-and-Inflation.pdf

One year.  It seems incredible, but it has been one year since COVID-19 struck our shores.  One year since the World Health Organization declared a pandemic.  One year since the markets crashed and the schools closed, and we realized just how much we take toilet paper for granted.

Since then, the markets have recovered and risen to new heights.  The economy, meanwhile, has recovered more slowly.  Now, a quarter of the way through 2021, we have a new president, several new vaccines, and a completely different world than the one we knew before all this started.  We have also seen some renewed volatility in recent weeks.  This has many of my clients asking, “Where are the markets going next?  What should we expect for the rest of 2021?”

We’ll address those questions in this letter.

As you know, there are two types of long-term market situations: Bull markets and bear markets.  But the whole “bull vs bear” concept can also be used to describe two types of investor sentiment.  Bulls are investors who have a positive, or “bullish”, view of where the markets are headed.  Bears, meanwhile, generally have negative, or “bearish” expectations.  So, in this letter, we’re going to let both animals debate each other, each presenting their case for why the markets will have a positive year or a negative one.  We’ll start with the Bull, move onto the Bear, and then give the Bull a chance for a short rebuttal.  Finally, as your financial professionals, we’ll give you our view.

The Bullish View

Last year’s market crash was sudden, swift, and deep.  But in the grand scheme of things, it didn’t last very long.  In fact, it took only six months for the markets to recover.  (By contrast, it took the markets almost six years to recover after the Great Recession.)  Since then, the markets have risen to new highs.

Three things propelled the markets to this remarkable turnaround: Low interest rates, federal stimulus, and the expectation of a major economic recovery.  Let’s start with the first one.  To help juice up the economy, the Federal Reserve lowered interest rates to a historic degree.  Low interest rates promote more borrowing and spending, two pillars our economy is based on.  They also help people buy homes and encourage businesses to invest more in themselves.  (Including hiring more workers.)

Congress, meanwhile, has passed three major stimulus packages in the last year.  The most recent bill was signed by President Biden on March 11.  The America Rescue Plan Act of 2021, as it’s called, provides $1.9 trillion in aid for both businesses and consumers.1  Among other things, the Act extends COVID unemployment benefits through Labor Day, provides $1,400 direct payments to individuals, expands certain tax credits, and grants billions to small businesses to help meet payroll and retain workers.1  The first two stimulus packages had a positive impact on things like retail sales and consumer spending, and it’s widely expected that this one will, too.

This combination of low interest rates and government stimulus have helped the economy tread water while we deal with the virus.  But much of the market’s rise is due to something else: Expectation.  Specifically, expectation that the pandemic will end, and the economy will hit the accelerator. As more people are vaccinated and case numbers fall, the thinking goes, more and more of society will re-open, releasing a flood of pent-up demand.  Demand to travel, to eat out, to catch a movie in theaters, you name it.  Add the latest round of stimulus to the mix, and suddenly Americans have both extra money in their pocket and the means to spend it.  In other words, all the ingredients are there for a major economic comeback, the likes of which we haven’t seen in decades.

Now, we seem closer than ever to that expectation becoming reality.  As of this writing, there are three approved vaccines in the U.S., with more than 115 million doses administered.2   (40 million people are currently considered fully vaccinated, approximately 12.3% of the total population. 2)  Currently, our nation is averaging over 2 million shots each day.2  It’s no surprise, then, that cases in the U.S. have been falling for weeks.  In fact, as of March 19, cases are down over 14% over the last two weeks.3

We’re not out of the woods yet, not by a long shot.  Masks and social distancing will continue to be a part of our lives for some time yet, and of course there are relatively new variants of the coronavirus to deal with.  But if we can maintain this trajectory, increasing the number of people vaccinated and reducing the number of people sick, that could do wonders for our economy.  It could lead to more of society re-opening, leading in turn to more jobs, more consumer spending, and greater company earnings.  Greater earnings, of course, usually lead to higher stock prices.

The Bearish View

So, in light of all this, how can anyone have a negative view of where the markets are headed?  It all comes down to a single word:  Inflation.

Inflation.  It’s a scary-sounding word that conjures up images of German children stacking useless money in the 1920s, or gas rationing in the 1970s.  For decades, economists have monitored it relentlessly.  The Federal Reserve considers managing inflation to be a core aspect of its mission.  That’s partly why our nation’s inflation rate has been relatively stable over the last twenty years.

But recently, some analysts and investors have begun stressing over inflation again.  They don’t deny that the economy is poised to grow.  They just worry that it will grow too much, too fast.  There’s a word for this, too.  Economists call it overheating.

When an economy overheats, it essentially no longer has the capacity to meet all the demand it faces from consumers.  Some producers will simply not be able to supply all the goods their customers want.  Other producers, to keep up with that demand, will be forced to raise prices.  It’s a classic example of the Law of Supply and Demand.  (When the demand for something outpaces its supply, the price goes up.)  For example, if everyone suddenly decides to fly to that vacation spot they’ve been putting off for a year, the cost of air travel would skyrocket.

If the economy were to grow too quickly, prices would rise across the board – and the value of our currency would drop.  This, essentially, is inflation: When the general price level rises, a dollar simply pays for less than it used to.  That makes it much harder for people to buy the goods and services they need.  Or to pay off their debts.  It makes it harder for businesses to hire new workers or pay the workers they already have.  The upshot?  When inflation gets too high, consumer spending plummets, unemployment jumps, and economic booms turn into economic busts.

Some experts worry this is what’s in store in 2021.  They see the economy as a garden hose that’s been tied up into a knot.  Untie the knot – or re-open the economy too quickly – and the water will burst out with sudden, savage force.

So, here’s what this has to do with the stock market.  Normally, the Federal Reserve combats inflation by raising interest rates.  Higher interest rates tend to cool off the economy, because they prompt people to save their money instead of spending or borrowing it.  A cooler economy decreases inflation, and gradually things go back to normal.  The problem is the stock market has become accustomed to the Fed’s low interest, “easy money” policies.  Low interest rates mean that many types of investments, most notably bonds, simply don’t provide the same return on investment as they would in a high-interest rate environment.  That drives more and more investors into the stock market to get the returns they need.  But what happens when interest rates go up?  Consumers and businesses could cut back on spending, which in turn could cause earnings to fall and stock prices to drop.

Fear of inflation, and fear of higher interest rates.  That’s the bearish view in a nutshell.


We promised the Bull would have the opportunity for a short rebuttal, so here it is.  There are two main reasons for thinking this fear of high interest rates are overblown.  The first is that, even if inflation does go up – which it likely will – we have a lot of room to work with before it becomes a problem.  In 2020, the inflation rate was only 1.2%.4  That’s well below the 2% mark the Fed generally aims for, and nowhere close to the mindboggling numbers we saw in the late 70s and early 80s.  (In 1979, for example, the inflation rate was 13.3%.4)

The other reason is that there’s no reason to assume the Federal Reserve will automatically raise interest rates just because inflation goes up.  Why?  Because the Fed itself has said that it won’t!5  Currently, the Fed sees stimulating the economy and boosting employment to be far bigger priorities than tamping down on inflation, and recently, the Fed Chairman suggested interest rates would remain low at least until 2022.

My View

We’ve told you what the Bulls and Bears think.  So, here’s what we think.  Go watch a video on YouTube and then read the comments.  Ever notice how many people like to say “First”?  In my experience, a lot of investors – be they Bulls or Bears – are like that.  They stress over “getting ahead” or “being first”, and as a result, they overreact to the slightest provocations.

Here at Hudock Capital Group, we don’t worry about being first. We only care about moving forward.  That’s why we focus on one thing: Investing for the long term without trying to guess whether the Bulls or the Bears will dominate.  That means positioning ourselves to take advantage of bull markets while being prepared – mentally and financially – for bears.

Historically, an improving economy leads to a stronger stock market.  If that happens in 2021, wonderful!  But if interest rate fears worsen and volatility goes up, experience has taught us not to overreact.  Remember, we’re not investing for next week, or next month, or next quarter.  We’re investing for years.  Any general rise in prices is likely to be temporary, just as any bouts of volatility are temporary, too.

It’s been a year since the pandemic began.  A year since some of the worst market turmoil in a long time.  We got through that by being disciplined and patient, and we’ve been rewarded.  So, that’s what we’ll continue to do.  Other investors can worry about being a Bull, or a Bear, or “first”.  We’ll just continue being disciplined and patient.

If you have any questions or concerns about the market, please feel free to contact me.  In the meantime, enjoy the upcoming spring season!


Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

1“The American Rescue Plan Act Greatly Expands Benefits through the Tax Code in 2021,” Tax Foundation, March 12, 2021.

2 “How is the COVID-19 Vaccination Campaign Going In Your State?” NPR, March 19, 2021.

3 “How Severe is Your State’s Coronavirus Outbreak?” NPR, March 19, 2021.

4 “US Inflation Rate by Year,” The Balance, March 1, 2021.

5 “Powell Confirms Fed to Maintain Easy Money Policies, The Wall Street Journal, March 4, 2021.

This material was prepared by Bill Good Marketing.

Riverfront March 29, 2021
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‘Art’ vs ‘Science’ in Asset Allocation

Written by RiverFront Investment Group.  Reprinted with permission from RiverFront Investment Group.  Redistribution is prohibited.

Riverfront March 22, 2021
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Changes in Washington – What it Means for Taxes and Spending

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Riverfront March 15, 2021
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Why Are Interest Rates Rising…and What Does It Mean for the Stock Market?

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Hope-Faith-Love-and-Luck… March 12, 2021
Downloads: St.-Patricks-Day-Letter-2021.pdf

As you know, the four-leaf clover has become a common symbol of St. Patrick’s Day.  Because four-leaf clovers are so rare — you have about a 1-in-5000 chance of finding one1 — they’re often associated with luck.  But in truth, each leaf represents something special: luck, yes, but also hope, faith, and love.

The reason we mention this is because, over the years, we’ve learned that the history of St. Patrick’s Day represents each of these attributes, too.  Now, that might seem pretty deep for a day where we all pinch each other for not wearing green.  But it’s true!  To illustrate how, let’s take each clover leaf one at a time, starting with…


Did you know that, in an alternate universe, we might all be wearing blue on St. Patrick’s Day?  While “kelly green” is the most popular symbol associated with the day, it didn’t used to be that way.  Saint Patrick himself is thought to have worn blue for much of his life, and the Order of St. Patrick, a fraternity of knights founded in the 17th century, adopted the color, too.

So why the color green?  Because green was the color of those who sought Irish independence.  Beginning in that same century, more and more Irish people began hoping that one day, they would have their own country, free of dominion under a foreign crown.  These patriots increasingly wore green as a symbol of Irish identity and culture.  It would take centuries for independence to happen, but generation upon generation passed down the secret hope that one day, Ireland would be counted among the free nations of the world.

So why green, exactly?  It all has to do with another symbol associated with both Ireland and Saint Patrick: the shamrock.


Although they are often confused, shamrocks and four-leaf clovers are not the same thing.  Shamrocks are standard three-leaf clovers.  What makes them special is not how many leaves they have, but what they represent.  In the late 1700s and early 1800s, Irish revolutionaries adopted the green shamrock as their emblem.  They included shamrocks on their uniforms, their flags, and in their songs.  Eventually, the shamrock became the de facto symbol of Ireland itself.

The shamrock’s importance goes back over 1500 years – all the way to Saint Patrick himself.  Legend has it that when Patrick first began preaching Christianity in Ireland, he used the shamrock to illustrate the concept of the Holy Trinity.  Patrick’s message of putting faith in God resonated, and he reportedly baptized thousands of people.

Over time, Patrick became the patron saint of Ireland, and eventually, like the shamrock, a symbol of Ireland itself.


Just as Ireland’s symbols have changed over time, St. Patrick’s Day itself has changed, too.  Now, it’s not only a celebration of the saint, but of all things Irish.  That’s important, because Patrick is not the only patron saint of Ireland.  Another is Brigid of Kildare – a remarkable woman, and quite possibly, someone who knew Patrick well.

Brigid was born into slavery in the 450s.  (The parallels to Patrick are interesting because Patrick was also a slave for many years.)  From an early age, Brigid showed amazing love for those who had less than her.  She never passed up an opportunity to feed, heal, or comfort the poor.  Some stories claim she could replenish by praying to God.  Other stories, less religious but just as interesting, tell of the time when she gave away her master’s entire store of butter.  Furious, her master tried to sell her to a king.  While he bartered, Brigid gave away his jeweled sword to a beggar so he could sell it to buy food.  When the king saw this, he took it as a sign that she was holy and commanded her master to set her free.

As she grew older, Brigid decided to devote her life to charity.  She founded her own monastery and worked tirelessly to ensure that women and the poor had a safe place to worship.  She even founded Ireland’s first art school!  One of the earliest books about Patrick said, “Between Saint Patrick and Saint Brigid, the pillars of the Irish people, there was so great a friendship of charity that they had but one heart and one mind.”2  When Brigid died in 525, she left behind an incredible legacy of compassion, charity, and most of all, love.


“The Luck of the Irish” has become a common phrase.  It means to have extremely good fortune, but the saying originated in America, not Ireland – and it was initially meant to be a slight, not a compliment.  Here’s how Edward T. O’Donnell, author of 1001 Things Everyone Should Know About Irish American History, puts it:

“During the gold rush years…a number of the most successful miners were of Irish and Irish American birth.  Over time this association of the Irish with mining fortunes led to the expression ‘luck of the Irish.’  Of course, it carried with it a certain tone of derision, as if to say, only by sheer luck, as opposed to brains, could these fools succeed.”3

As the decades passed, though, the opposite became true.  “Luck of the Irish” now often refers to someone who has succeeded through their wits, their cleverness, and their perseverance.  And given how much Irish immigrants have had to overcome over the centuries – including both prejudice and economic hardship – we’d say those qualities describe the Irish people pretty well!

As you can see, there’s more to St. Patrick’s Day than simply throwing on a green shirt or eating corned beef.  St. Patrick’s Day represents the hope, faith, love, and perseverance of an entire people.  It’s a day for all of us to practice those things as well.  A day for us all to treasure and enjoy.

On behalf of our entire team, we wish you a happy St. Patrick’s Day!


Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

1“How rare are four-leaf clovers really?” share the luck, 2017.

2 “Brigid of Kildare,” Wikipedia,

3 Edward T. O’Donnell, “1001 Things Everyone Should Know About Irish American History,” Broadway, February 26, 2002.

Riverfront March 8, 2021
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Housing is an Important Key to Economic Growth…Fortunately it is Getting Back on Track

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Riverfront March 1, 2021
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The Three Rules play ‘Red Light Green Light’

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Riverfront February 16, 2021
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Valuations Could Stay Elevated…and that is OK in our view!

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Presidents Day – We Are All Mortal February 10, 2021
Downloads: Presidents-Day-We-Are-All-Mortal.pdf

Happy Presidents’ Day!

Once upon a time, the topic of “who sits in the White House” was not nearly so inflammatory as it is today.  Of course, people have always had different political opinions.  But in recent years, it seems like our differences have become far more of a talking point than the things we have in common.

Whether it’s our political beliefs, our skin colors, our ethnicities, our religions, our respective life experiences, or even which sports teams we root for, the things that make us different too often end up dividing us.  You only have to go online for a few minutes to see how much anger and derision exist in our country today – because we too often focus on our differences instead of what we have in common.

With Presidents’ Day coming up, we decided to take a trip into history to see how past presidents have addressed this.  That’s how we came across a speech by John F. Kennedy in 1963.  In his address, President Kennedy talked about the concept of world peace and what it would take to actually achieve it.  High on the list, he explained, was the idea that we should focus more on what unites us than on what divides us.

Here’s an excerpt of what he said.  To us, it’s one of the most important sentiments any president has ever expressed.

“Let us not be blind to our differences–but let us also direct attention to our common interests and to the means by which those differences can be resolved. And if we cannot end now our differences, at least we can help make the world safe for diversity. For, in the final analysis, our most basic common link is that we all inhabit this small planet. We all breathe the same air. We all cherish our children’s future. And we are all mortal.”1

We don’t live in the Cold War, as he did, but we do live in an equally uncertain era.  An era in which even minor disputes can feel like unbridgeable divides.  But as President Kennedy went on to say, it’s our responsibility as American citizens to bridge those divides.  To heal those hurts.  To see the good in others and build off that.

“My fellow Americans, let us examine our attitude toward peace and freedom here at home.  The quality and spirit of our own society must justify and support our efforts abroad.  We must show it in the dedication of our own lives.  [For] wherever we are, we must all, in our daily lives, live up to the age-old faith that peace and freedom walk together.  In too many of our cities today, the peace is not secure because the freedom is incomplete.

It is the responsibility of the executive branch at all levels of government – local, State, and National – to provide and protect that freedom for all our citizens by all means within their authority. It is the responsibility of the legislative branch, wherever that authority is not adequate, to make it adequate. And it is the responsibility of all citizens in all sections of this country to respect the rights of all others and to respect the law of the land. 1

Kennedy was far from the only president to address this issue, of course.  Over twenty years later, President Ronald Reagan would say this, in a speech given on July 4, 1986:

“All through our history, our Presidents and leaders have spoken of national unity and warned us that the real obstacle to moving forward the boundaries of freedom, the only permanent danger to the hope that is America, comes from within.  It was their last gift to us, this lesson in brotherhood, in tolerance for each other, this insight into America’s strength as a nation.

“My fellow Americans, it falls to us to keep faith with them and all the great Americans of our past. Believe me, if there’s one impression I carry with me after the privilege of holding for five-and-a-half years the office held by Adams and Jefferson and Lincoln, it is this: that the things that unite us — America’s past of which we’re so proud, our hopes and aspirations for the future of the world and this much-loved country — these things far outweigh what little divides us. And so…we reaffirm that Jew and gentile, we are one nation under God; that black and white, we are one nation indivisible; that Republican and Democrat, we are all Americans. …With heart and hand, through whatever trial and travail, we pledge ourselves to each other and to the cause of human freedom, the cause that has given light to this land and hope to the world.”2

What if this Presidents’ Day, we all did our best to see each other the way Kennedy and Reagan urged us to?  To not be blind to our differences, but to put more stock in what we have in common.  To remember that we all must share this planet together.  That we all breathe and dream and love.  That we are all doing the best we can.  That we are all mortal.

What if we did it not just on Presidents’ Day, but every day?  What kind of nation would we live in then?  What kind of nation would we leave to our children?  It would be a better one, we suspect, than the one we live in now.  So, this Presidents’ Day, that’s just what we intend to do.  To remember the words of our former presidents…as well as the words from another famous speech:


“And so, my fellow Americans: ask not what your country can do for you.  Ask what you can do for your country.”


This is something we can do.

We wish you a happy Presidents’ Day!


Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

1“Commencement Address at American University, Washington, D.C., June 10, 1963.  John F. Kennedy Presidential Library and Museum.

2 “Address to the Nation on Independence Day,” July 4, 1986.  Ronald Reagan Presidential Library and Museum.

Riverfront February 8, 2021
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Sweat the Small Stuff

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