Harbor Advisor Q1 2021 Newsletter

THE HARBOR ADVISOR * APR 2021

Volume XXXIII, Qtr I

Opportunity Follows Adversity

An interesting phenomenon that occurs during and after adverse events is that opportunities are created at a faster pace than in calmer, less economically or socially stressful times. While it is early to tell the longevity of recent business creation activity, 4.4 million new businesses were started last year- a 26.9% increase over 2019* and while primarily in ecommerce, we know from experience that new ideas, technology, and businesses flood the markets. Thinking about opportunity during times of adversity can assist in successful investing but it also can be a process that moves you forward rather than getting stuck in a cycle of uncertainty, inaction and even fear. This activity is not new for us, remembering how Harbor reacted to the market crash of 2008 comes to mind. Instead of despairing and falling victim to the fear and uncertainty following the crash, Harbor instead focused on strategic planning for the firm. We created systems and procedures that we use and are grateful for even today. Harbor clients and staff both benefited. 2020 has taught us that adversity is more common than we would like to think and is something with which we need to learn to cope effectively.

Brent Gleeson writes “Those that exhibit authentic resilience find ways to not just navigate the murky waters of uncertainty, but rather transform adversity into opportunity.”*

Further, his list of steps to take resonates as these are the same steps we have taken in past crises and are taking during the Covid-19 pandemic. He suggests:

· Take stock of reality

· Quickly assess options

· Create a plan

· Fall back on your experience

· Commit to a path forward

At Harbor we are currently engaged in restating our strategic goals and direction; this includes decisions around new staff members, expansion of our planning expertise and new services aimed at the individual and their specific needs. We are emphasizing the basics for our clients, including reviewing risk, checking for liquidity, and increasing communications. We are uncovering new investment trends borne of recent adverse events, specifically those we think have a 5-to-10 year time horizon. Carefully researched and chosen investments in these trends can be very profitable and catapults the investor far ahead of the average portfolio. We are approaching these decisions with conviction believing in our process and the long experience we have in planning and investing.

I wrote last quarter that humor and a bit of self-care go a long way towards coping with the pandemic. This is also true for creating opportunity from adversity. I would add that this aspect of navigating a crisis may be the most important in that action and clear thinking are most effective if you are managing stress and maintaining your health. Acknowledging that the pandemic and other life events are stressful and creating a plan to reduce stress and maintain your health is paramount.

As always, please reach out to us if you have questions, need reassurance, or just want to say Hi! We love hearing from you-

Happy Spring.

Elyse

*Forbes, Sept 9, 2020

Market Segment Cyclicality and the Rise of Small Caps

As we surpass the one year anniversary of the Covid-19 pandemic and accompanying market sell off, it is worth looking back on the ensuing market cycles that resulted. From the middle of February to the middle of March 2020 the Russell 2000, the...

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Fund Focus: iShares Nasdaq Biotechnology ETF (IBB)

In early 2021, we replaced our holding of the iShares U.S. Healthcare Providers ETF (IHF) with the iShares Nasdaq Biotechnology ETF (IBB). Created in 2001, IBB tracks an index composed of biotechnology and pharmaceutical companies listed on the NASDAQ and is invested in biotechnology, pharmaceuticals, life sciences tools and services and healthcare services. It is comprised of 286 holdings and includes companies of all capitalizations; however, it favors the large cap space. The current top 5 holdings are Amgen Inc., Gilead Sciences Inc., Illumina Inc., Vertex Pharmaceuticals Inc. and Moderna Inc. This sector space is expected to continue benefiting from drug approvals, growing artificial intelligence dominance, ongoing research and development, and increased healthcare spending. The recent race to create treatments and vaccines for Covid-19 is opening new opportunities in the biotech space and we believe this sector pick to be a strong addition to our portfolios.

Jennifer Baham

Quarter Market Recap

The major focus in the first quarter of 2021 was the vaccine rollout. News outlets provided daily updates regarding how many people had received doses and expected timeframes for all US adults to be eligible. In addition, for much of the quarter the markets were waiting for a final signed version of the latest stimulus package. The markets were generally unsurprised with the various updates to these and other events. This allowed for a relatively steady march upward toward a generally positive set of returns across many indexes. Notably, there was a bit of a shock in the fixed income market as the yield on the 10-year treasury rose dramatically and surprised the market makers. This fluctuation sent ripples throughout most markets in the world but has since slowed down in magnitude. If we continue to see such dramatic rises in the 10-year treasury yield, we will have more volatility in both fixed income and equity markets. We believe a plateau in this rate is likely and would be a healthy pause. The quarter contained some shifts in market favor from high growth names like technology to more cyclical sectors. Only time will tell if this is a short-lived shift or a longer trend. During the quarter, the S&P 500 gained 5.77%, the Russell 2000 returned 12.44% and the EAFE increased 2.83%. The Barclay’s Aggregate declined 3.37%.

Megan Miller

American Rescue Plan Act of 2021 - Harbor Wealth Management

The American Rescue Plan Act of 2021 ("Plan") is an enormous piece of legislation designed to promote economic recovery and provide assistance to millions of Americans who have been impacted by the COVID-19 pandemic. The Plan has a special focus...

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Food Bank of the Rockies

1 in 7 of our neighbors struggle to meet their basic food needs. FBR partners with 500+ hunger relief programs in Northern Colorado & Wyoming to provide food to those in need.

Habitat for Humanity

Habitat for Humanity helps build a world where everyone has a decent place to call home. Building strength, stability and self-reliance through shelter.

Harbor donates to numerous charitable organizations annually and we've dedicated this section of our newsletter to share information about these charities.

Staff Spotlight - Karen Didde - Harbor Wealth Management

We are doing a Staff Spotlight on each of the Harbor staff. We will get up close and personal and have some fun with our Q & A's. Karen Didde has been with Harbor since 2003. What is the most recent...

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harbor-wealthmanagement.com

What is a Target Date Fund? Jennifer Baham, CFP and Principal explains what a Target Date Fund is and the advantages of using one.

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HARBOR HAPPENINGS

Online Divorce Workshop: April 15, 9:00 - 11:00am

Working Remote : In support of the various governmental guidelines to combat the spread of the COVID-19 virus, Harbor is working remotely, and our office is closed. We can still be reached at our individual email addresses and our main phone number or direct staff phone lines. When it has been established that we are safe to reopen our office, we will send out a communication.

A full copy of our updated ADV (the form used by investment advisors to register with the SEC) and Privacy Policy is now available on our website - Click here. Please notify us if you would like a hard copy sent to you by mail.

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