In Newgrange, just north of the River Boyne in County Meath, Ireland, there exists a giant burial tomb, constructed, it is estimated, around 3200 BC and measuring over an acre in area. Little is known about the people who built it. However, we can surmise that they had some knowledge of both astronomy and engineering since each year, only at dawn on this day, the Winter Solstice, a beam of sunlight shines through a specially contrived opening above the tomb entrance, illuminating carvings on the walls of an inner chamber.

Given the immense resources necessary to build this monument, archeologists have speculated that it was central to their religion and it is easy to imagine ancient rituals, complete with human sacrifice, where the high priests of that religion would promise the people that the sun would, once again, rise higher in the sky. They were, no doubt, revered by the people for the accuracy of this prediction and for their role in making it happen.
 
Today, on this shortest day of our longest year, congressional leaders have concluded their ritual of frenzied negotiation and produced a new coronavirus relief belief bill.  While it can help some workers and businesses get through the winter, it will do little to accelerate the arrival of an economic recovery. Despite this, investors can have confidence in that recovery in the months ahead, as vaccines, rather than fiscal policies, finally vanquish the pandemic. They should also, however, consider the long-term costs of the fiscal and monetary measures taken during the pandemic. In addition, they should recognize an expectation of strong earnings growth and low inflation that seems to be fully priced into parts of U.S. equity and fixed income markets today. This pricing underscores the need for a more active and diversified approach to investing going forward to avoid mediocre returns.
 
The roughly $900 billion stimulus bill contains some familiar features. These include:
 
• One-time $600 dollar checks per adult or child below certain income levels.

• A $300 enhancement to weekly unemployment benefits for 11 weeks from late December to mid-March, as well as money to fund extended unemployment benefits.

• $284 billion in new forgivable PPP loans with expanded coverage.

• An extension to eviction moratoria to January 31st and $25 billion for rental assistance.

• $82 billion in funds for schools and colleges to help comply with health protocols.

• $48 billion for the purchase and distribution of vaccines and enhanced testing.

• $45 billion for airlines, airports and transportation infrastructure.
 
In addition, language has been added forcing the Federal Reserve to close four lending facilities, while returning unused funds from these programs to the Treasury and prohibiting the Fed from restarting these programs without new legislation from Congress.
 
For the economy, this package should indeed provide some relief. The resurgent pandemic has clearly caused an economic slowdown which is becoming evident in short-term indicators such as unemployment claims, airline travel and restaurant reservations. While fourth quarter real GDP growth could still be as strong as 5% annualized, growth in the first quarter could slip to 1% or below.
 
The cash infusion of new stimulus checks and enhanced unemployment benefits should go some way to sustaining consumer spending over the winter months. In addition, new PPP loans, while clumsy and bureaucratic, may help some companies cling on for a few more months. That being said, the short-term nature of this relief underscores the need for a further relief package in the new Congress, since it is clearly not enough to sustain either the unemployed or small businesses until the pandemic winds down. In addition, the lack of further relief for state and local governments increases the likelihood of further layoffs in this sector in the months ahead.
 
For the federal government, the new relief package will add to the deficit In September, the Congressional Budget Office estimated a deficit of $1.8 trillion for this fiscal year.  This package, along with another relief package in the new Congress and an infrastructure bill, could boost the deficit to between $2.5 and $3.0 trillion, raising the national debt to close to 110% of GDP.
 
For the Federal Reserve, in theory, new language barring them from reopening credit facilities should not diminish their ability to combat financial shocks. After all, a simple act of Congress could provide them with new authorization. However, the history of the Great Financial Crisis suggests that Congress is not particularly wise or timely in dealing with financial issues in a politically charged atmosphere.
 
For investors, the passage of this bill, assuming it is quickly signed into law, should provide some relief, since it can lessen economic hardship over the winter. However, it should also be noted that a combination of big deficits and low interest rates during the pandemic could set the stage for higher taxes and interest rates when the economy has fully recovered.
 
Investors should also recognize that, after a surprisingly good year for portfolio returns, asset prices look stretched. The forward P/E ratio on the S&P500 as of Friday, was 22.1 times – 33% higher than a 25-year average of 16.5 times. The real yield on 10-year Treasury bonds, using year-over-year core CPI inflation was -0.70%. These valuations suggest very modest returns on plain vanilla portfolios in 2021 and the years that follow. This being the case, investors may want to look for better value within particular pockets of U.S. equity markets as well as ensuring that they have greater exposure to international equities and alternatives.
 
The sun will, once again, rise higher in the sky and the U.S. economy will recover as it always does. However, this broad economic recovery will not change the fact that the pandemic has left many individuals impoverished and many small businesses closed for ever. In a similar way, a broad economic recovery provides no guarantee of further gains in financial markets in the year ahead. In fact, a starting point of big deficits, low interest rates and high valuations could make this a very challenging year for traditional 60/40 portfolios. This being the case, it is important for investors to remain vigilant and ensure that their portfolios are best positioned to still ride out the winter and prosper in brighter days ahead.

David Kelly is chief global strategist at JPMorgan Funds.