It has been a good year for the market so far, but things have started to slow down as we head into the final quarter. The Morningstar Broad Index is up 14.92% overall this year, however, it has only increased by .03% the last quarter. This is a good example of how the market goes up and down in an unpredictable manner with spurts and pauses. 

I have just returned from the Morningstar Investor Conference in Chicago where the “best and brightest” investors speak and give their views on the markets. Morningstar claimed that there were 700 people in attendance this year while the majority of attendees (2,400) opted for virtual attendance, however, I would be surprised if there were more than 400 people physically present. Just two years ago, there were well over 3,000 people physically present.

The large money managers, in general, believe, with a few exceptions, that with all of the government money, low-interest rates, and pent-up demand caused by COVID, we will enjoy increased earnings and, thus, an increasing market well into next year. I am more optimistic than I was prior to the conference but I still have concerns. The events that could derail these projections, which we will be watching, are supply chain disruptions, a new COVID variant shutting us down yet again, a federal government shutdown, problems caused by restrictions on non-vaccinated workers, and, finally, the unknown consequences caused by the above. To quote the Chief China Economist from Nomura Holdings, with respect to the supply chain disruptions, “Global markets will feel the pinch of a shortage of supply from textiles, toys to machine parts. The resulting supply shock will likely further push up global inflation, especially in developed markets such as the United States”. The number of container ships sitting and waiting to be unloaded is a good example, meaning you may want to do your holiday shopping early. Just this morning the government shutdown was resolved, but only until December 2021.

I will not speculate on the other issues. I have written in the past that I would much rather own a stock with increasing earnings that pays a 2% dividend rather than a 2% Treasury security with no upside. The pent-up demand is real, and you just need to look at the Denver real estate market to see an example.

Some of the other takeaways from the conference were:

1) Technology, to deposit a check with a teller costs the bank $40.00, an ATM $4.00, and your phone $.04. 

2) What may seem like a slowdown, is the market getting back to its usual pace and valuations. 

3) The mRNA vaccines are a good example of healthcare improvements that are just now coming to market; gene editing and therapy will revolutionize medicine.

4) Finally, is government spending; spending a trillion on anything is going to boost the market for a while, at least until it must be paid for. Don’t think for a second that the “tax the rich” will not include most wage earners. Paying it back and inflation are issues for another time.

The market is complex and always changing. Nick, Keith, and I will be watching all of these things in order to do our best to give you the most accurate, and up-to-date investment advice possible. As always, we thank you, and if you ever have any questions or concerns, please do not hesitate to contact us.

Willis Ashby, CFP

Integra Financial, Inc.

President 

Sources: WSJ, First Trust, Reuters, and Morningstar