Holy moly, we’re two-thirds of the way through 2021. The year is flying by! Economically speaking, we’re not seeing what the economists were expecting at this point in the recovery. Yes, they thought we’d see a higher GDP and people out circulating more, but no economic recovery model had us dealing with the Delta variant.
What this means in the real world comes down to how willing people are to get back out to restaurants, bars, sporting events and concerts and be in close quarters with other people. We’re also at a crossroads where certain establishments, venues and countries are moving toward requiring either proof of vaccination or a negative COVID test.
Now, I’m not going to get into anything medical here, or address the issue of the vaccinated vs the unvaccinated. However, as these rules are put in place to address a global health crisis, they are going to force some people whose beliefs align differently to stay home in this heightened environment. We also have the end consumer who doesn’t want to get sick (or get sick again), or who has at-risk family members and will choose to stay home.
The end loser here is the economy. Fewer people in motion, fewer card swipes and fewer butts in seats from bars to stadiums means a greater impact on the recovery we’re seeing. Instead of the quick bounce-back we saw after the initial COVID panic of 2020, the actual economy will likely take longer to recover because of these rules that vary from city to state to country. Every new strain or variation of this disease creates even more confusion as to what we should or shouldn’t be doing. So far, this confusion has not bled into the equity markets. The economic powers that be will eventually take note that this recovery isn’t happening as quickly as predicted, and will price that in. When will this happen? I have no idea. Could this happen? Absolutely.
At Family Financial Partners, we’ve taken measures to ensure our client portfolios are allocated in a way that can benefit from this teeter-totter economy where one day, X type of company may be benefiting, and the next day, Y companies may be faring better. Our focus as advisors is in identifying companies with excellent CEOs that have something to offer that can’t be easily duplicated by other foreign entities. Additionally, the companies we look for provide a product or service that, even if the price were to increase due to higher employment costs, the end user wouldn’t blink. Of course we can’t build your entire portfolio this way, but as you look at the companies you hold in your Envestnet accounts, many of them do fit these three goals and objectives.
Market-wise, for the rest of year, my crystal ball isn’t as broken as it was in 2020 and, barring a black swan event, I expect 2021 to finish positively. This is the time of year when the earnings outlooks for companies are tweaked and raised as they look to 2022 and beyond. As always, with a third of the year to go, there’s a still a lot of runway between here and where we think things are headed into next year.
If you’re not currently working with us and you want to chat about our investment strategy and how it might fit your unique goals and situation, give us a call. And if you are working with us and we haven’t seen you in a while, come on in for a chat. Our office is open and we’re doing everything we can as a fully vaccinated staff to keep you safe when you visit. If you’d prefer a conference call or Zoom chat, of course that’s totally fine as well.
On behalf of all of us, we wish you a happy and healthy fall, and if this latest wave is under control, we hope to host our annual Christmas Open House and give you a tour of our expanded office space. We’ll see you soon!
Article by David Smyth, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.
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