What Does the Delta Variant Mean for Your Investments?

A woman in a business suit wearing a mask looks out an office window.

(Image credit: Getty Images)

published 23 August 2021

With the Delta variant of COVID running rampant, how does another looming wave of COVID impact your portfolio? What do potential mask mandates, a rise in cases and slowing vaccination rates mean for the market and the economy?

Let’s review what we already know.

With the rise of the Delta variant, infection rates are significantly up. Just months ago infection rates were on a downward trend, but all across the country we’re seeing the rate of COVID cases rise exponentially. While this variant, and others, are rising, we’re also seeing vaccination rates slow. According to the CDC, the U.S is just over 50% fully vaccinated. Experts, like the Cleveland Clinic, believe that we’d need vaccination rates of 70% to 85% of the total population to reach the herd immunity threshold.

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We’ve been fighting COVID for a long time. The country as a whole is experiencing pandemic fatigue, and we’d like to get back to “normal.” There’s a simmering sense of unease and frustration, with many companies and government entities mandating vaccinations or masking. Some companies are finding it difficult to find ample employees – and some employees are finding it difficult to find safe employment. Overall, we’re seeing higher rates of hospitalizations across the country as well.

While infection rates are increasing, death rates are not increasing at the same speed per the CDC. This is due to vaccinations, and those who are vaccinated are less likely to be hospitalized than the unvaccinated. The current unemployment rate, while not at pre-pandemic levels, is at 5.4% as of July, which is historically not too shabby. With unemployment decreasing, we’re also seeing corporate earnings go up, particularly in industries that were hit hard by the pandemic.

Overall, GDP growth is continuing in recovery, with the first estimate of Q2 2021 GDP growth at 6.5%. Since this is not the first wave of the pandemic, things going forward may seem a bit less scary and frightening, and the future feels a bit more certain – even if we’re dealing with COVID. There’s a portion of the country that is feeling less afraid of contracting COVID. Stock markets have continued to hit record highs, even throughout the pandemic.

There’s no need to panic when it comes to the markets and the Delta variant. We’ve been through this before, and we’ll get through it again. While the markets hate uncertainty, we can take solace in the fact that we’ve already lived through this before. On the whole, we came through the other waves with a strong economy. Yes, we had a recession for the first time in a decade, but we made it through and to the other side.

Investments are meant to be for the long term. Growing your wealth takes time, consistency and a level head. Changing your portfolio based on a quick dip in the market – or even an extended downturn – is a recipe for your own disaster. Those who were hurt most in the markets due to the pandemic were those who were short-term investors or emotional investors – neither of which is a great long-term strategy for growing wealth.

Don’t let another wave of COVID rattle you. Prepare yourself for whatever may come – both in your investments and in your personal life. There will be growth opportunities for those willing to take them, and there will be winners and losers in the market. If additional waves and variants of COVID continue to wreak havoc on our country, we have to prepare for the industries that might get hit. Airlines and travel could see declines again. We may see spikes in e-commerce as these industries continue to dominate the economy.

There are undervalued areas within the global markets that we’ll continue to see flourish. While this won’t come without expected bumps in the road, you’ll need to be proactively managing your portfolio to find opportunities. Analyzing data can be complicated and tiresome, and it pays in dividends to have a trusted financial planner handling this for you. Financial planners help you stay calm when markets are tumultuous, so that you can focus on your long-term goals.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Topics

Building Wealth Coronavirus And Your Money

In March 2010, Andrew Rosen joined Diversified, bringing with him nine years of financial industry experience. As a financial planner, Andrew forges lifelong relationships with clients, coaching them through all stages of life. He has obtained his Series 6, 7 and 63, along with property/casualty and health/life insurance licenses.