Listen to the podcast below to hear about Financial Connections’ first podcast for 2021.
- Vaccines and the economy
- Climate change
Script:
Belated Happy New Year to everyone.
I wanted to wait until we had the peaceful transition of power to the new Administration. Then I got caught up preparing a webinar I was asked to design by the National Association of Personal Financial Advisors aka NAPFA about financial planning for unmarried couples. I present February 4 at their West Coast Symposium.
We have all seen the vaccine drama playing out. While the acquisition and distribution is in the forefront I believe we also need to stop, think and acknowledge how amazing it is to have a vaccine so quickly. The experience gained from SARS and MERS allowed for this accelerated development and the use of mRNA vaccines.
As you may recall, we listen various experts through podcasts and webinars. One of them had an interesting view from the 30,000-feet. His take was by the end of July, most people will be vaccinated. Add to that the people who have already gained immunity from having the virus and you will cover approximately 80% of the population. Plus the people who refuse to wear a mask or get vaccinated will probably contract COVID – more immunity being gained. The result, herd immunity. An interesting perspective from an economist.
I’m not sure about the statistics but it is certainly the direction we’re moving. Assuming the Biden’s Rescue Act is passed followed up by an anticipated Recovery Plan, there can be optimism for the economy and employment reaching pre-COVID levels. Having the Federal Reserve Bank’s Jay Powell working hand-in-hand with Secretary of the Treasury Janet Yellen can only help the coordination between monetary and fiscal stimulus. Powell and Yellen worked together at the Fed for years.
The market is due for a decline for a number of reasons. We just don’t know when or how much the market will increase before it declines. Retail investors meaning people not working with an advisor and not institutions, have adopted a point of the view that the stock market keeps going up regardless of the crisis. Many consumers experienced the longest stock market expansion in history, and last year the market ignored the pandemic and was positive for 2020.
Just as in the late 90s, the day traders contributed to the rising stock market before the tech bubble burst, it is happening again today. Many retail investors, especially younger ones who use phone apps such as Robinhood are active traders. According to a NY Times article, Robinhood users buy and sell more frequently than any other retail platforms such as Schwab or eTrade.
Even the International Monetary Fund is warning about the overconfidence among investors increasing their risk and not preparing for a sudden drop in the market.
An interesting bit of trivia for you. China was the only economy that grew last year. The forecast is that China will surpass the U.S. economy in 2027. China also has the second largest bond and equity market in the world. The U.S. is first.
I want to spend a moment talking about climate change. The Biden Administration has it as an important objective going forward. I wanted to point out this is not just an American issue. The world has taken up climate change. Globally, nations are working on solutions for alternative energy and a reduction of greenhouse gases. It’s nice to be part of the world again fighting climate change to help our planet.
We are researching some investment options targeted at climate change. If you would like to discuss adding it to your portfolio, please get in touch.
Now for some good news. Porpoises were almost extinct because of the gillnets used for fishing. The gillnets were banned along the California Coast in 1994. The Porpoise population has rebounded. In Morro Bay alone, the population increased from 570 in 1990 to over 4,000 by 2012.
The population growth in the world and the food supply are always something to be concerned about. A Kentucky-based company AppHarvest specializes in creating indoor farms with a sustainable approach. It is non-GMO, chemical pesticide-free, recycles rainwater and allows food growth year around. They save space, recycle water and produce 30 times more food than a conventional farm. They just delivered beefsteak tomatoes to Walmart and Kroger.
Lastly is an invention that has special meaning for me. The first patient ever received an artificial cornea implant. It was developed in Israel and merges naturally with human tissue. My father had his first corneal implant in 1945. It didn’t take because they had no way to preserve the cornea as they transported it.
He had another one in 1966 at Mt. Zion in S.F. and another one in the late 80s. I can only imagine how this breakthrough could have helped him.
Until next time, don’t hesitate to contact us if you want to chat. We’re only an email or a phone call away. Please stay well.