Mid-Year Observations

Wooster Corthell |

To our clients,

I hope you are all well and enjoying the ability to be with your extended family and loved ones again.

My midyear report to you is divided into two parts. First is a brief recap of our shared investment philosophy; second is my perspective on our current situation.

General Principals

  • You and I are long-term, goal-focused, planning-driven equity investors. We’ve found that the best course for us is to formulate a financial strategy together and to build portfolios based not on a view of the economy or the markets, but on our most important lifetime financial goals.
  • Since 1960, the Standards & Poor 500 stock index has appreciated approximately 74 times and its cash dividend has gone up about 30 times. Over the same period, the Consumer Price Index has increased by a factor of nine. At least historically, mainstream equities have functioned as an extremely efficient hedge against long-term inflation and a generator of real wealth over time. We believe this is more likely than not to continue in the long run, hence our investment policy of owning the world’s successful companies.
  • We believe that acting continuously on a rational plan - as distinctly opposed to reacting to current events - offers the best chance for long term investment success. Simply stated: the time to alter your financial strategy is when your goals or life circumstances change rather than as a reaction to current events.
  • We do not believe the economy can be consistently forecast, nor the markets consistently timed. We’re therefore convinced that the most reliable way to capture the long-term return of equities is to ride out their frequent but historically temporary declines.
  • The most important question is whether you are on track to achieve your financial goals. Do you have a plan to help your children finance college? Can you cover the cost of an emergency? Will your nest egg allow you to fulfill your retirement dreams? The answers to these types of questions determine whether your overall financial strategy is working.


  • America’s economy continued its dramatic recovery in the first half of 2021 spurred by a) the proliferation of effective vaccines against COVID and the retreat of the pandemic, b) massive monetary and fiscal accommodation and c) its own deep fundamental resilience, which ought to never be underestimated.
  • The S&P 500 closed yesterday (07/20/21) at 4,323.06, an increase of 15.1% from its close at the end of 2020 (3,756.07). Had the news about the Delta variant, inflation spikes, chip shortages or the crisis du jour kept you out of the market, you would have missed this tremendous opportunity for growth.
  • Admittedly, we are still in an unprecedented experiment in both fiscal and monetary policy. Its outcome remains impossible to forecast. The possibility that we've over-stimulated the economy was highlighted this spring by a significant resurgence in inflation. But be wary of headlines that scream “Inflation is Coming,” without reading the details that compare prices this year to exactly a year ago while we were in the throes of the pandemic. Of course used cars are 28% more expensive this year than last. Dealers couldn’t give them away last year because no one would enter their lots for fear of the virus. Add the Taiwan semiconductor fire and subsequent chip shortage and now new cars are nearly impossible to get. Thus, a high-demand, low-supply situation temporarily exists. (Have you tried to buy a house lately?)
  • Sadly, third world countries will not even see the vaccine until 2022. As their populations become vaccinated though, their economies, will begin the road to recovery. As global demand for U.S. goods and services returns to a pre-pandemic level, I believe our economy should continue to thrive well into next year.

Here’s the bottom line: On February 19, 2020 – the market’s record high peak just before the pandemic took hold – the S&P 500 closed at 3,386. It then proceeded to decline 33% in just 34 days amid the worst global health crisis in a century. If you had bought the Index at that epic top and were still holding it on June 30 of this year, your total return with reinvested dividends would have been close to 28%. Not too shabby for one of the scariest times in history. As Peter Lynch of Fidelity fame put it: “The real key to making money in stocks is not to get scared out of them.”

As always, it is a privilege for our team to work side-by-side with you to build wealth and a secure future for you and your family.

All my best,

Al Wooster

Past performance is not an indicator of future performance. Loss of principal and/or loss of portfolio value are possible.