Quarter 1 - 2021 Market Update A light at the end of the tunnel

Quarter 1 - 2021 Market Update
                             A light at the end of the tunnel

By Eric W. Hilliard                                                                  January 18, 2020
CERTIFIED FINANCIAL PLANNER ™
Branch Manager
Raymond James Financial Services, Inc., Member FINRA/SIPC

Happy New Year! We hope you enjoyed some special time with loved ones during your holiday season.

We made it to 2021 and we are bullish! 2020 is now in the record books and one of its defining features was
volatility. As the January 4th Technical Daily from the Raymond James Portfolio Strategy Team pointed out,
the S&P 500 Index closed up or down at least 1% 109 of the year’s 253 trading days. That happened only 37
days in 2019, a year in which the S&P 500 experienced lower volatility than normal. The greatest volatility
occurred in February and March of 2020, as COVID-19 cases and lockdowns spread across the U.S. Several
days experienced up or down moves of 5% or greater. Those were very trying times and we were all glad
when that abated. Volatility has returned to more typical levels since then. We expect it may remain that way
for 2021 as the theme will be global economic recovery from the pandemic and life slowly returning to normal.

A strong end to 2020
The Raymond James Portfolio Strategy Team, led by Mike Gibbs, pointed out in the Charts of the Week
Report January 5th that the strong gains made during November and December represented the strongest
November/December combo ever. Seven other times when November and December posted greater than
10% returns the following January was positive 100% of the time, with an average return of 4.69%.

With that said, short-term markets have been a bit over-extended and are expected to rest or pull back. Given
the impressive gains made recently, a pullback is probably more likely than sideways action. We are not sure
what will cause it, but we do expect some profit-taking to occur in the next 4-6 weeks. Remember that
pullbacks of 5%-10% occur most every year, are normal and should not be feared. This is all short-term and
not indicative of what we think the year will deliver overall. This natural action allows equity markets to refresh
and regain momentum.

Before we go on to discuss the broader picture as we see it currently, please take a few moments to review
2020 returns.

Returns as of 12/31/2020 ________________________________________________________________

Dow Jones Target Risk Indexes                                         QTD             YTD      Past 12 months
        Dow Jones Aggressive Index                                    17.92%          15.99%          15.99%
        Dow Jones Moderate Aggressive Index                           14.48%          14.14%          14.14%
        Dow Jones Moderate Index                                      11.11%          12.24%          12.24%
        Dow Jones Moderately Conservative Index                        7.68%          10.08%          10.08%
        Dow Jones Conservative Index                                   4.02%          8.05%            8.05%
U.S. Equity Indexes
        S&P 500 (Total Return)                                        12.15%          18.40%          18.40%
        RUSSELL 2000 (Total Return)                                   31.37%          19.96%          19.96%
International Equity Indexes
        MSCI EAFE DEVELOPED MARKETS                                   16.05%          7.82%            7.82%
        MSCI EMERGING MARKETS                                         19.70%          18.31%          18.31%
Fixed Income Indexes
BLOOMBERG BARCLAYS US AGGREGATE BOND                                   0.67%          7.51%            7.51%
BLOOMBERG BARCLAYS US CORPORATE HIGH YIELD BOND                        6.46%          7.13%            7.13%
Returns provided by Morningstar as of 12/31/2020.

Major theme for 2021 is expected to be recovery
COVID-19 disrupted lives around the globe in many unsettling ways last year. The first-ever postponement of
the summer Olympics, which was scheduled to take place in Tokyo last summer was one of the grander
disruptions. However, we all suffered disappointments as life was seemingly put on hold. We experienced
disruption as jobs, schooling, and the celebration of life milestones were all impacted. Many things we took for
granted as normal aspects of life before last March were dramatically changed, leaving us all unsettled. As the
pandemic dragged on many experienced loneliness, depression and financial crisis. Many people suffered the
greatest loss of all, that of a loved one. To each of you who experienced a loss, especially the loss of a loved
one due to COVID-19, we are deeply sorry. The virus has been a tragedy in so many ways.

Most everyone would love to put all that happened in 2020 behind us and get back to normal as quickly as
possible, but there is still work to do. Vaccines are in the early stages of distribution and it now seems like we
can finally see light at the end of the tunnel, but it will take time. Health experts say will take several months to
vaccinate most Americans and we still need to get through a challenging winter. As the weather begins to
warm and vaccinates are ramped up, it is hoped that more businesses in more cities and states will be able to
finally re-open and function in more normal ways. We certainly hope that six months to a year from now we are
discussing topics other than masks, viruses and lockdowns.

Equity markets responding with optimism
Markets are generally forward-looking and respond to whether things on balance are getting better or getting
worse. This is why, in spite of continued negative news flow about the pandemic, markets have mostly made
gains the past several months. To support citizens and the economy during this difficult time, the U.S.
government provided financial stimulus and the Federal Reserve has maintained very low interest rates.
Capitalism took hold as several pharmaceutical companies worked hard and quickly to develop a successful
vaccine through Operation Warp Speed. This enabled markets to begin looking forward with optimism.

The impact of low rates and a weaker dollar
Globally, we believe markets will continue to be supported by global central banks who have kept interest rates
very low. There are no reasons near-term for the Federal Reserve to raise rates, and the Fed Chairman

Jerome Powell has suggested rates will remain extraordinarily low until at least 2023. This will be supportive of
equities, but more challenging for U.S. core fixed income investments.

                                 “We are not even thinking about raising rates.”
                                       Fed Chairman Jerome Powell 6-10-2020

Also supportive of international equity investments, and emerging markets, in particular, has been a weaker
U.S. dollar. Dollar strength or weakness versus other currencies tends to be a several-year trend, so
international equities are likely to be a more important part of our investment strategy for the next several
years. Many countries have, in fact, begun 2021 with nice gains and after several years of U.S. stock market
outperformance, emerging markets and developed countries outside the U.S. could deliver stronger returns in
2021. Regardless, we do believe there is a synchronized global recovery afoot, reaffirming that diversification
remains prudent, as always.

Large U.S. multi-national companies will also benefit from a weaker dollar, as they will be able to sell more
product outside the U.S. (it will be less expensive for international consumers to purchase U.S. goods).

Stimulus and infrastructure bills also supportive of equities
Another recent development equity investors are looking forward to is that newly-elected President Biden has
indicated he intends to pass a large infrastructure spending bill. Both Republicans and Democrats favor
infrastructure spending, which is something they were expected to be able to agree on regardless of who won
the election. With both houses of Congress having narrow margins, slightly favoring Democrats, moderates in
both parties should have more influence on policy-making the next two years.

Looking forward to sunnier days, hopefully arriving about the time summer does
We look forward to life after COVID-19 and yearn for a day when every topic on the 5 o’clock news does not
mention “social distancing”, “lockdowns”, and “wearing a mask” (we have always been proponents of washing
our hands, so we’re all for continuing that). There is much discussion about how much of life will return to the
way it was before the pandemic and what things, such as the ability to work from home and possibly less
business travel, will be altered forever. We suspect many things will return to the way they were before, but
some changes will become entrenched.

We do expect pent-up demand for consumer spending, especially travel and entertainment. Consumers,
which typically represents two-thirds of economic spending in the U.S. have been saving their money and have
a lot of cash on hand to spend or invest.

Until then….
We need to all remain cautious, take care of ourselves and our families. We will continue doing our part to look
out for you financially, analyzing the evidence to consider whether things are getting better or getting worse,
both short and longer term. The good news is, we do remain in a secular bull market that we still believe has
years to run.

We will continue e-mailing you invitations to informative conference calls when they occur. Please also check
our website and social media pages regularly for timely updates on all these topics.

Website:                                                    www.raymondjames.com/hilliard
Facebook:                                                   https://www.facebook.com/hfgraymondjames
LinkedIn:
    Eric Hilliard, CFP®, Branch Manager                     https://www.linkedin.com/in/ewhilliard/
    Wade Stafford, CFP®, Associate Financial Advisor        https://www.linkedin.com/in/ericwstafford/
    Jenny Hilliard, Investment Executive:                   https://www.linkedin.com/in/jennyhilliardrj/

As always, please let us know of any significant changes in your life or situation that could impact your financial
plan. In the meantime, we continue to follow the processes we have developed over the years that enable us
to provide you our very best.

We are all in this together and will get through this together
The world took it on the chin during COVID-19. We have been reminded that we are vulnerable and that we
need each other. It has been a time to slow down and appreciate our blessings. It has also demonstrated what
happens when face-to-face dialog is reduced to communication through social media. We can’t wait until we
can attend sporting events, theatres, concerts, barbeques, and parties and be able to fully enjoy each other
once again. Our hope for 2021 is that we not only rebuild our economy but also our faith and respect for each
other. After all, we are all Americans and we are in this together.

Thank you for your trust in me and in our practice. Cheers to 2021!

5720-201 Six Forks Road                                 Raleigh, NC 27609                                       919-846-7268

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DJ GLB Aggressive Index - The DJ GLB Aggressive is a total-portfolio index that allow investors to evaluate the returns on their
portfolios considering the amount of risk they have taken. These profiles are defined based on incremental levels of potential risk
relative to the risk of an all-stock index. It's made up of composite indices representing the three major asset classes: stocks, bonds and
cash. The asset class indices are weighted differently within each relative risk index to achieve the targeted risk level. The weightings
are rebalanced monthly to maintain these levels. The DJ GLB Aggressive index is 100% of All Stock Portfolio Risk.

DJ GLB Conservative Index - The DJ GLB Conservative is a total-portfolio index that allow investors to evaluate the returns on their
portfolios considering the amount of risk they have taken. These profiles are defined based on incremental levels of potential risk
relative to the risk of an all-stock index. It's made up of composite indices representing the three major asset classes: stocks, bonds and
cash. The asset class indices are weighted differently within each relative risk index to achieve the targeted risk level. The weightings
are rebalanced monthly to maintain these levels. The DJ GLB Conservative index is 20% of All Stock Portfolio Risk.

DJ GLB Moderate Aggressive Index - The DJ GLB Moderate Aggressive is a total-portfolio index that allow investors to evaluate the
returns on their portfolios considering the amount of risk they have taken. These profiles are defined based on incremental levels of
potential risk relative to the risk of an all-stock index. It's made up of composite indices representing the three major asset classes:
stocks, bonds and cash. The asset class indices are weighted differently within each relative risk index to achieve the targeted risk
level. The weightings are rebalanced monthly to maintain these levels. The DJ GLB Moderate Aggressive index is 80% of All Stock
Portfolio Risk.

DJ GLB Moderate Conservative Index - The DJ GLB Moderate Conservative is a total-portfolio index that allow investors to evaluate
the returns on their portfolios considering the amount of risk they have taken. These profiles are defined based on incremental levels of
potential risk relative to the risk of an all-stock index. It's made up of composite indices representing the three major asset classes:
stocks, bonds and cash. The asset class indices are weighted differently within each relative risk index to achieve the targeted risk
level. The weightings are rebalanced monthly to maintain these levels. The DJ GLB Moderate Conservative index is 40% of All Stock
Portfolio Risk.

DJ GLB Moderate Index - The DJ GLB Moderate is a total-portfolio index that allow investors to evaluate the returns on their portfolios
considering the amount of risk they have taken. These profiles are defined based on incremental levels of potential risk relative to the

risk of an all-stock index. It's made up of composite indices representing the three major asset classes: stocks, bonds and cash. The
asset class indices are weighted differently within each relative risk index to achieve the targeted risk level. The weightings are
rebalanced monthly to maintain these levels. The DJ GLB Moderate index is 60% of All Stock Portfolio Risk.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The S&P 500 is an unmanaged index of 500 widely
held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of
the international stock market. MSCI Emerging Markets Index is designed to measure equity market performance in 23 emerging
market countries. The index’s three largest industries are materials, energy and banks. The Russell 2000 is an unmanaged index of
small cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the
investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The Bloomberg Barclays U.S. Corporate High Yield Bond
Index is composed of fixed-rate, publicly issued, non-investment grade debt, is unmanaged, with dividends reinvested and is not
available for purchase. The index includes both corporate and non-corporate sectors. The corporate sectors are Industrial, Utility and
Finance which include both U.S. and non-U.S. corporations. An investment cannot be made in these indexes. Index performance does
not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary.
International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible
political and economic instability. These risks are greater in emerging markets. The performance noted does not include fees or
charges, which would reduce an investor's returns. Asset allocation and diversification do not guarantee a profit nor protect against a
loss. Any Opinions are those of Eric and Jenny Hilliard and are not necessarily those of RJFS or Raymond James

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