Quarterly Commentary – April 2021

I read a number of newsletters, as well I am sure many of you. A key in my mind is not necessarily what they say now but what was said previously. We can all offer our opinion but how does that opinion withstand the test of time? So, considering that, I want to provide some quotes from our April 2020 client memo.

“So, what is reality or better put what is more PROBABLE than not. What is more probable is that Social Distancing will have an impact to “flatten the curve”, scientist will come up with both treatments and ultimately a vaccine and business will re-open.”

“Things will get better. Recall above, in my belief, this is binary choice. We either get better or we don’t. We cannot indefinitely maintain on a shutdown level. Communities will band together to help in any way they can. Money will be donated to provide meals to first responders and the needy. When a critical need arises people will rush to fill that need.”

“Scientists all over the World and very importantly right here in our backyard are working on overdrive to come up with treatments and ultimately a vaccine.”

“So, given that back drop we do believe the financial markets will rebound. How long will it take? Nobody can answer that for sure. All we can do is look at human behavior and how economies and stock markets have rebounded from prior stock market crashes.”

Were we clairvoyant? Did we have some secret view of the future? Absolutely not. What we did have is a view of the past. Many times, the financial markets have reached the cliff’s edge, looked in the abyss and collectively said, “We don’t want to go there.” In light of that, what really happened?

Below are returns for the first quarter of 2021 and the 1-year period of April 1, 2020 – March 31, 2021.

Dow Jones Industrial Average (Dow)
30 Selected Large US Companies
Standard & Poor 500 Index
500 Largest US Companies
100 Largest Companies on the NASDAQ
EAFE (Europe Australia Far East)
Large/Mid Cap Companies listed across 21 overseas developed markets
Nikkei 225 Index
Japan’s leading index of stocks
Shanghai Composite
China’s SSE index
Hang Seng (HSI)
Hong Kong market-cap weighted index
Source: www.morningstar.com

What do these returns tell us? Technology led the recovery with the NASDAQ-100 gaining an astounding 72.04% for the past 12 months outpacing an incredible 50.48% return for the Dow. Difference being that large US technology companies such as Amazon, Google and Netflix are all members of the NASDAQ-100 but not of the Dow. On the international front, Japanese markets (Nikkei 225) equaled US indexes while markets in China, Shanghai and Hang Seng lagged the performance against US peers. For the first quarter of 2021 the Dow lead US markets while technology companies slowed their dramatic pace of 2020.

Okay you are thinking, “where do we go from here?”. Our thoughts are this. Financial markets will continue to respond positively to these realities:

  • While we are currently experiencing an uptick in COVID-19 and its associated variants, vaccines are getting into people’s arms.
  • According to the Centers for Disease Control (CDC) as of April 1, 2021, a bit over 150 million doses have been administered in the US with 29.4% of the population having received at least 1 dose and 16.4% fully vaccinated. At the current pace of over 2.5 million vaccinations per day (some days over 3 million), by June 30 well over 200 million more vaccines will have been administered and hopefully by June the US will be very close to being fully open for business across all 50 states. https://covid.cdc.gov/covid-data-tracker/#vaccinations.
  • Money is flowing into the US economy. Over the past 12 months extraordinarily little has been spent on entertainment, dinners out, movies, travel. Birthday celebrations have been few and far between, anniversary trips have been postponed, graduation parties were cancelled. Our feeling is that people are more than anxious to get back to normalcy and with that all the previously mentioned methods of entertainment, and more, will explode with activity.
  • Combine that with flood of money released by the federal government, e.g., the deposit of $1,400 courtesy of the US Treasury to almost 127 million people in the country that alone is over $177 billion. The American Rescue Plan, signed by the President on March 11, contains the $1,400 as part of its total $1.9 trillion in federal spending.
  • Keep in mind this is on top of the $2 trillion CARES Act signed by President Trump March 27, 2020 and CARES ACT II signed by Trump December 27, 2020 was a $900 billion bill. So, all in at this point, the federal government has allocated $4.8 trillion dollars to the US economy.
  • This does not include monies allocated from individual state budgets. For example, the Washington State legislature passed its own $200 million COVID-19 relief bill (passed on the last day of the legislative session, March 12, 2020). Similar actions were taken by many states across the country.


A most frequent question to me is, “How did the stock market do so well in this time of pandemic?”. That can be answered in many ways but chief among those answers would be tied to the tremendous sums allocated by governments to support the economy until the virus could be arrested. Combine that with the uneven impact of COVID-19 throughout the economy. Face to face service-related businesses came to a standstill while technology and the new “face to face”, i.e., Zoom meetings flourished and companies in the technology marketplace, large and small, saw tremendous growth.

So, from the gains of the past 12 months where do we go from here? Our belief is that the financial markets will continue to be strong. Of course, not always in a straight line but strong none-the-less. Why do we hold these beliefs?

  1. Vaccines are being administered and have proven to be effective.
  2. More vaccines are on the way.
  3. Spending, spending and more spending. As mentioned above, pent-up demand is about to be unleashed.
  4. Interest rates, while higher than 12 months ago, are still at historic lows. This makes it easier for both individuals and companies to borrow money.
  5. Technology advancement. It feels to me that we are in a period reminiscent of the 1990’s when developments in technology took place in rapid leaps and bounds.
  6. Lastly, the 2 billion people in India and China are still in motion with more and more moving to a middle-class lifestyle. That means spending and more spending.


Past performance does not indicate future results. This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by LPL Financial. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The Standard & Poor’s 500 Index is an unmanaged Index of approximately 500 large US companies. NASDAQ-100 is an unmanaged index of approximately the 100 largest market capitalization companies on the NASDAQ stock exchange. Dow Jones Industrial Average is and unmanaged index of 30 companies selected to represent a broad sampling of the US economy. The Hang Seng Index is a stock market index consisting of 50 of the largest and most liquid companies listed on the Hong Kong Stock Exchange. This accounts for 40% of its total market capitalization. The SSE Composite (also known as Shanghai Composite) Index is the most used indicator to reflect SSE’s market performance. Constituents for the SSE Composite Index are all listed stocks (A shares and B shares) at the Shanghai Stock Exchange. Nikkei 225 is a price-weighted index, operating in the Japanese Yen (JP¥), and its components are reviewed once a year. The Nikkei measures the performance of 225 large, publicly owned companies in Japan from a wide array of industry sectors. EAFE Index is a stock index offered by MSCI that covers non-U.S. and Canadian equity markets. It serves as a performance benchmark for the major international equity markets as represented by 21 major MSCI indices from Europe, Australasia, and the Middle East.