Week of 7/22/2021

We can only speak anecdotally about what we have learned about our own community, but the surge in COVID cases is real. Hospital resources are being stretched in many places and unvaccinated persons make up the vast majority of hospitalizations and deaths. There are a number of reasons why some cannot receive the COVID vaccination, and each individual must make their own informed choice. But the data shows that taking the vaccine is a safe and effective means of preventing serious illness and we hope participation rates improve.  We encourage everyone to follow the same risk-managed approach we apply to investments to other areas of our lives.

Here are 10 Icelandic phrases that will be useless when visiting (but are still instructive). Research published by the National Bureau of Economic Research argues that Urgent Care Centers do not reduce the number of emergency room visits and probably increase health care spending. According to Joblist, 25% of 1,006 “soon-to-graduate” college students who were surveyed in the 1st quarter of 2021 said the 2020 pandemic caused them to change the industry they intend to work in following their college years. Housing prices have increased markedly all over the United States. The average single-family home in the USA has appreciated 15.7% over the 1 year ending 4/30/21, up 7.9% per year over the last 5 years, up 6.4% per year over the last 10 years, and up 4.1% per year over the last 20 years (source: Federal Housing Finance Agency).

Q: Where do you see the markets going in the 2nd half of 2021? A: We’ll answer this one in a roundabout way. As Brad McMillan explains in this post, the National Bureau of Economic Research (NBER) has officially declared an end to the COVID-19 recession. In fact, they said that it ended in April of 2020! He summarizes their rationale, and we encourage you to read the whole post. The market recovery that started in late March 2020 reflected the belief that economic closures would end sooner rather than later. The market is usually a leading indicator, often moving well before the data shows support for it. The movement of the market can provide insight into what investors are expecting for the economy. The NBER’s declaration won’t move the market because it confirms actions already taken. Monday’s decline was due in part to fears that a COVID resurgence could hamper economic activity or lead to new closures. Tuesday and Wednesday’s positive results seem to reflect the belief that increasing cases won’t hamper economic growth. It’s tempting to explain all of these day-to-day movements very simply, as we have above. Ultimately, the most important factor is company earnings and whether the prices investors are paying for those companies reflect their financial results. Investors expect rising earnings as the economy continues to improve. If these expectations persist, it is reasonable to expect that the overall trend for stock markets will be positive. Sometimes expectations are wrong, and so your investment mix should continue to reflect your specific goals and situation.

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