Charts You Need to See – Q1 2021 Market Guide

Every quarter, J.P. Morgan Asset Management puts out their Guide to the Markets slide deck. It’s a great source of interesting and helpful information about the economy, markets, and investing. Here are the Q1 2021 market guide slides that stood out to me and how they may help you.

For a more thorough market overview, check out my team’s First Quarter 2021 Review, And a Look Ahead.

The Charts

Growth outperformed value in the last bull market (2009 – 2020). This bull market which began on March 23, 2020 has seen value outperform. Despite this strong relative stretch over the last year, value is still cheap relative to growth.

Value vs. Growth relative valuations-Q1 2021 market guide
Source: FactSet, FTSE Russell, NBER, J.P. Morgan Asset Management.
Growth is represented by the Russell 1000 Growth Index and Value is represented by the Russell 1000 Value Index. Beta is calculated relative to the Russell 1000 Index.

Additional evidence of the reopening trade as some of the hardest hit sectors/industries prior to the positive vaccine news from Pfizer have had the strongest performance since November 9, 2020 (day of Pfizer news).

Returns before and after November 6, 2020 - sector and industry-Q1 2021 market guide

This is always one of my favorite slides in the deck. Over the last forty years, the market averages a 14.3% intra-year decline. You have to expect annual double digit corrections every year as a stock market investor and learn not to overreact to them.

S&P 500 intra-year declines

The progress to herd immunity chart on the right is one I haven’t seen before. With increased vaccinations since that came out at the end of March, hopefully we are even closer…

Progress to herd immunity

Income inequality in the U.S. is on the rise.

Income inequality in the U.S.

Worried about higher inflation? Check out the bottom left square showing how different investments perform when inflation is low and rising. Interesting to note that gold is struggling this year. I don’t think it’s a worthwhile investment. There are other asset classes that do well in low and rising inflation, notably stocks and real estate, with more consistent returns in other environments also do well in other environments.

Investments and inflation-Q1 2021 market guide

Showing that U.S. stocks and International stocks take turns outperforming.

US vs. International outperformance

Another favorite. Don’t let short-term volatility shake you out of earning the market’s long-term returns.

Range of returns over different time periods

Patience continued…the average investor underperforms almost every type of investment by poor timing decisions and chasing winners.

Annualized returns by asset class

It’s been a long time since cash at least kept pace with inflation, and it’s really lagging now. Get that cash to work if it should be invested.

Income earned in a savings account compared to inflation-Q1 2021 market guide


Suggested Further Reading

Looking for more information on some of the Q1 2021 market guide topics, check out:

The Reopening Trade Continues

Worrying About Inflation

Investment Winners Rotate…and they’re doing it again