Skip to Content

Weekly Wrap: Our Outlook on the First Quarter, Inflation, and Tax Increases

We recap the week on and note the most popular stocks, funds, and exchange-traded funds.

Editor's note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

Just as more arms get jabbed with COVID-19 vaccines each day, more stimulus dollars are hitting bank accounts and mailboxes. Restaurants are reopening, baseball is welcoming back fans, and Godzilla vs. Kong made an impressive $50 million in its first weekend in theaters.

Let the spending begin! And with it, talk of inflation. No, not runaway inflation, 1970s-style. The Fed is unlikely to let inflation go unchecked--but it has said it will allow for higher inflation until the economy gets back on track.

Should you be concerned about inflation? As with most money matters, it depends. For starters, it depends on your personal inflation rate. Inflation isn't just about where the Consumer Price Index is; it's also about whether your own pocketbook is feeling the pinch of rising prices (and how great that pinch is) based on your own spending habits.

It also depends on your life stage. Investors in accumulation mode probably have enough stock exposure to generate portfolio returns in excess of inflation--and there's a chance a raise from your employer could help cover increases in your personal inflation rate.

It's a different story for those nearing or in retirement, though. Those approaching retirement might wonder how inflation could impact their withdrawal-rate plans. And those who already rely on their portfolios for retirement income likely have more modest equity allocations to blunt inflation’s impact.

So, before heading out to that restaurant, ballpark, or movie this weekend, conduct a personal inflation check to figure out if you should, in fact, take action. Action might include increasing your savings rate (and spending less), considering a more conservative starting withdrawal rate, or adding Treasury Inflation-Protected Securities to your portfolio.

--Susan Dziubinski

Editor's Picks Morningstar's Take on the First Quarter Our analysis of the first quarter in stocks and funds.

Why You Should Still Care About Inflation Inflation hasn't been much of an issue lately, but it's still a long-term threat.

The Workers' Guide to Retirement Income A brief overview of the topic for those who have not yet retired.

Top Earners, Businesses Likely to See Tax Increases We think tax hikes for businesses are inevitable as Democrats seek infrastructure upgrades, healthcare expansion, and other priorities.

33 Undervalued Stocks for the Second Quarter Here are our analysts' top ideas in each sector for the coming quarter.

2 Stocks to Play the Digital Learning Boom We may be at the next inflection point for online learning.

Portfolio Planning and Personal Finance With Christine Benz When Higher Inflation Meets Your Withdrawal Rate While few are predicting a 1970s-style inflation spiral, it's still worth thinking through how inflation could affect your plan.

Mutual Funds and Exchange-Traded Funds Vanguard Mishap Leads to an Estimated $200 Million Windfall for Investors Execution missteps in its Nevada 529 plan resulted in an exposure to stocks that was an eye-popping 20 percentage points more than investors expected.

Another Quarter of Gains for the U.S. Equity Market Value drives U.S. equity market gains in the first quarter.

The First Quarter in Bond Funds Rising interest rates unsettle bond markets.

4 Topnotch ESG Funds These Morningstar Medalists are great building blocks for a portfolio focused on sustainable investing.

When It Comes to Indexes, the Devil is in the Details Meaningful differences exist even among the most seemingly similar benchmarks.

Behind the Rise and Fall of an Esteemed Value Shop IVA had an auspicious launch, an unusual life, and a startling end.

The First Quarter in International-Stock Funds The recovery continues.

Stocks Drugmakers and Managed-Care Firms Still Look Undervalued We don't expect any major changes to U.S. healthcare policy.

Utilities Shaking the Interest-Rate Stigma Strong fundamentals should allow the sector to continue producing positive returns even as interest rates climb.

GE's Stock Price Largely Reflects Our Positive Outlook Here's how we differ from the bears and why we think long-term fundamentals will improve.

Why We Like Walgreens, but at a Better Price Strong international performance and pharmacy margins helped in the first quarter.

3 Overlooked Dividend Stocks That Top Managers Like These wide-moat firms are currently undervalued.

Vaccine Rollout Drives Energy's Rise But the sector's current tailwinds are likely unsustainable, so investors should prioritize high-quality businesses with stable balance sheets.

Drugmakers and Managed-Care Firms Are Poised for Growth These areas remain undervalued even though valuations for the overall healthcare sector look a bit high.

Rekenthaler Report Emerging-Markets Equities: A Promise Half-Fulfilled Their economies have astonished; their stock gains, not so much.

Advisor Insights Keep Keeping Your Distance: An Updated Look at 401(k) Participant Behaviors During the COVID-19 Crisis Self-directed individuals made more changes than investors using professionally managed solutions.

How Advisors Can Make Better Use of Their Time Dedicate office hours, a time for "brain-picking."

How To Incorporate Sustainable Investing Into Your Practice With this series, advisors can find a framework for helping clients meet sustainable investing goals.

The Long View Podcast John Rogers, Jr.: 'Be Willing to Talk About These Uncomfortable Issues' The Ariel Investments founder and chairman shares his views on diversity, equity, and inclusion, value's resurgence, stock-picking, and more.

Sustainability Matters How to Find Gun Stocks in Your Fund Portfolios Here are some steps you can take to analyze your exposure to gun manufacturers.

The Short Answer What Is Mad Money? Speculative investments may have a place in a portfolio, but only in small doses at the fringes.

Are Credit Card Companies Using Your Biases Against You? How to make smart financial decisions, when offers are designed to know you better than you know yourself.

Commentary Q1 2021 Markets Summary: A Change in Leadership Across Stock and Bond Markets Struggling investment classes and sectors turned in strong performances with hopes for progress against COVID-19.

Most Requested Stock Quotes Apple Microsoft Tesla AT&T

Most Requested Fund Quotes Vanguard 500 Index Vanguard Total Stock Market Index Fidelity 500 Index Dodge & Cox Vanguard Dividend Growth

Most Requested ETF Quotes ARK Innovation ETF Vanguard S&P 500 ETF Invesco QQQ Trust Vanguard Total Stock Market ETF SPDR S&P 500 ETF Trust

More on this Topic