Summer 2021 Investment Report

July 30, 2021

With many experiencing the significant economic recovery, the question of how long it will last continues to loom. We believe the shortest recession in history will be followed by one of the fastest recoveries in history and that growth will return to more muted levels in the coming year. As a result, we have not made significant changes to our investment strategy and remain focused on the long-term.

The economy has grown steadily in the recent months, as more people are vaccinated and consumer optimism is near an all-time high. Trillions of dollars of monetary and fiscal stimulus policies on top of strong household finances (as shown in graph to the right) has led, in some cases, to supply not being able to keep up with demand for many goods, resulting in price increases (inflation). The Commerce Department reported that Core Consumer Price Inflation (excludes food and energy) jumped at an annual rate of 4.5% in June 2021, the highest level in 30 years. We expect much of this inflation to be short-lived, as supply chains and inventories respond to the additional demand. In fact, we’ve seen some of this inflation recede in the latest readings. For example, used car and truck prices were up 10.5% year over year, and made up approximately one-third of the total CPI increase. That said, we have started to see price declines at weekly auctions as new car inventories build.

Continue reading to learn more about how we are navigating current market risks