“”We’re seeing very substantial inflation. We’re raising prices; people are raising prices to us. And it’s being accepted.” – Warren Buffet at his May meeting of shareholders. Consumer prices jumped 5% in May 2021 year over year.
Where are we, at the end of July 2021?
We have the world we live in and we have the world we need to prepare for. Government debt, deficit spending, printing of money are all actions that have consequences. The stock market reflects all known information at any time and inflation is no surprise revelation to our stocks and funds. Easy money and very low interest rates dominate the economic landscape and the markets like that – so we stay invested. Nevertheless, we know that in most calendar years there can be a correction of 10% or more, followed by a renewed upward trend. I know of no practical way to avoid these.
For those of who are genuinely worried about a bear market, I’ll point out that there are 2 kinds of bear markets – those that give us a warning and those that don’t. No warning would be like last year when covid hit. Warnings are much more common. In 2008 there was actually a 12-month-long steady decline into the September time frame. I do feel that the markets will tank – and I HOPE with warning – when the deficits inevitably become unsustainable.
Market returns in July were marginally up or lower (in the case of small company stocks). Technology, which had shown signs of slowing or reversing its climb, is back rising and I’ve taken steps to reinvest there. We have not been whipsawed often over the years, but we experienced that with small company funds during recent months. Our dividend payers made money in July, but the rate of gains slowed. However, it is worthwhile to remember that the beauty of dividend payers comes from long-term increasing or steady dividends.
For those of you who don’t know, I moved to Richmond last week. It’s been an exhausting process, but my grandkids make it all worthwhile. Please feel free to email me. I will be checking email frequently.
How Did the Markets and Our Funds Do in July 2021?
The below numbers are courtesy Morningstar Workstation:
