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The Bottom Line

● Equities ended the week, and the year, at new record highs amid the rollout of several Covid‐19 vaccines and a new economic relief package from Congress. Combining 2019 and 2020, the S&P and Nasdaq had their best two‐year performance since 1998 and 1999.
● The 10‐year Treasury yield fell to 0.91%, a full percentage point decline in 2020, its largest one‐year fall since 2011 and its second straight annual decline. Corporate and high yield bond yields both finished 2020 at record lows.
● The S&P CoreLogic Case‐Shiller National Home Price Index had a record +1.7% monthly gain and its best annual increase, +8.4%, since March 2014.

Stocks close 2020 at record highs

U.S. equities finished 2020 on a high note, with the S&P 500 and Dow Jones Industrial Average closing at all time highs. The S&P 500 gained +1.4% for the week to give it a return of just over 16.3% for the year, or 18.4% with reinvested dividends. Small cap stocks were a top performing asset class for October, November, and December, but investors took profits in the final week of the year as the Russell 2000 Index fell ‐1.5%. The technology‐heavy Nasdaq Composite didn’t finish the year with a record high but still hit one on Monday and still managed to make 55 record highs in 2020 on the way to a +43.6% return, or +45.0% with dividends – its best year since 2009.Inbondmarkets,theyieldonthe10‐year Treasury note fell to 0.91%, meaning it fell a full percentage point in 2020, its largest one‐year fall since 2011 and its second consecutive yearly decline. On the economic front, housing took a cue from stocks, ending the year at all‐time highs after a record +1.7% monthly rise in its final release of the year. Weekly jobless claims came in more favorable than expected while pending home sales were worse than expected. Moving into the new year, the markets will have to contend with the key Georgia Senate runoff elections.

Digits & Did You Knows

THE GOOD, THE BAD, AND THE UGLY — The S&P 500 Index finished 2020 at a record high, its 33rd of the year, andwitha total return of +18.4%, beating all Wall Street forecasts in spite of a global pandemic, the largest quarterly economic contraction ever (Q2‐2020), and the highest intra‐year unemployment rate since the Great Depression — 14.7% in April (source: Wall Street Journal, Compound Capital).

I BREAK FOR Y2K — On December 31, 1999, the New York Stock Exchange closed three hours early to allow technical experts to prepare for the possibility of “Y2K” computer malfunctions, which were almost universally predicted. Nothing happened (source: The Wall Street Journal).

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Source: Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange‐traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds may be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐YieldBond(iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 ValueETF);MidGrowth(iSharesRussell Mid‐CapGrowthETF);MidValue (iSharesRussell Mid‐Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4%Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.

Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
© 2020 Prime Capital Investment Advisors, 6201 College Blvd., 7th Floor, Overland Park, KS 66211.

Chris Bouffard
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