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Mid Year Market Update Thumbnail

Mid Year Market Update

Welcome to the start of the second half of the year! Below are some quick highlights from the market and the economy for the first half of the year. I did send this out on Friday, but to clients only. I wanted them to have some “useless” facts they could use to impress family and friends over the holiday weekend.  There are benefits to being a client😉 Regardless, here it is for your enjoyment!


  • If you have looked at your statements, you may have noticed we have had one of the best starts of the year. The S&P500 is up 14.4%. Not too shabby.
  • The S&P has only done better 16 other times. In those other situations, the market averaged another 9.7% the next 6 months.
  • It was positive 12 out of 16 of those periods. Here is where I remind you that past performance is not indicative of future results.
  • As I write this, the market has closed up in 8 of the last 9 sessions.
  • We seem to be in the old “do no wrong” phase. The economy continues to improve (more jobs and lower unemployment), interest rates are low, and there is not a whole lot of volatility in the market, unless you own meme stocks, bitcoin and/or lumber.
  • Small Cap Value is leading the way in 2021 (Dimensional Fund owners are probably finally happy for the first time in a decade) with returns of 26.7%. Interestingly, Small Growth is the worst of the main US asset classes only being up 9% this year.
  • The 10-year annualized numbers show us that Large Growth leads with annual returns of 17.9%. Small Value brings up the rear with annual growth of 10.8% (Dimensional investors are now sad again).
  • One ignored sector is REITs (Real Estate Investment Trusts). They are up 21.3% this year. Yes, I use those in my portfolios as I’ve never ignored them.
  • The June unemployment rate is back below the 50-year average of 6.3%. June’s number was 5.9%.
  • Wage growth for June was 4.6%, which is above the 50-year average of 4%.
  • In May, the Headline CPI number was 4.9%, which is a full percentage point above the 50-year average of 3.9%. Core CPI was 3.8%, which is also the 50-year average. Core CPI excludes fuel and food costs.
  • Just to impress your friends, it wasn’t Food CPI driving the higher Headline number as Food CPI was at 2.2%, which is well under the 50-year average of 3.9%. That leaves Energy CPI as the culprit. For May, Energy CPI was 27.8% (YIKES!). The 50-year average is 4.4%. This is a number to keep an eye on.
  • Consumers expect inflation to average 2.8% a year for the next decade. “Professional” forecasters are going with 2.3%. I put the quotation marks around professional.
  • A barrel of WTI crude is $73.47 now. It was $11.57 April of last year.
  • Bonds/Fixed Income continue to struggle this year. All US Treasuries have been negative except for TIPS (Treasury Inflation Protected Securities). Sector bonds have done better, but none close to the performance of the S&P.
  • As interest rates rise nearly all bonds have negative price change. We are still a couple of years away from the Fed thinking they will raise rates, but the bond market will give us an early read on what they expect with rate changes.
  • The good ol’ 60/40 model has done 9.2% so far this year.
  • As a reminder, the annualized numbers for the last 20 years (ending 2020) are always interesting. The S&P500 has averaged 7.5%, REITs have done 10% a year, and the “average” investor has managed returns of 2.9%. This is mostly due to bad behaviors.

I’m Dan Johnson, CFP®, founder of Forward Thinking Wealth Management. I run a flat-fee financial planning and investment management firm located in beautiful Akron, OH. Although I am in Akron, OH, I work with clients regardless of location. I cater to owners of equity compensation positions who are looking to organize their financial lives, keep more of what they make, and do the things they want in retirement and even now.