Summer 2021

Mid-February through July 4^th, is usually the busiest time of year at work for my husband, Roger. It seems that right after the NFL plays their big game, or thereabouts, people start thinking about what they are going to do next. Roger works in sales selling fun ‘toys’ like boats, snowmobiles, ATVs, jet-ski’s, you get the idea. He meets all kinds of people from all across the country. 

This year, Roger’s busy season has already ended, when it should be at its height. The demand for these items has been so high that weeks before Memorial Day, inventory was at an all-time low. In addition, many of the manufacturers capped production for 2021, meaning the dealership couldn’t get any new boats to keep up with the exploding demand. In fact, one company, let dealerships know in January (January!) that they would stop producing 2021 models until mid-year, when the 2022 styles rollout. It was unbelievable, but what has happened is a story we are hearing about so many industries where goods are in high demand. 

The same story has been heard about lumber, appliances, cars, houses, the list goes on….low inventory, high demand and rising costs. What does this mean and how will it affect you? Well, it’s the old supply and demand story and this chapter starts in March 2020, when the economy shut down due to the COVID-19 pandemic. With everything shut down and 90% of workers sent home, there was no one left to make the goods from start to finish….the supply chain was broken. Just so we are all on the same page, a supply chain is the entire process of making and selling commercial goods. It begins with the supply of materials the manufacturer uses to produce the goods for you to buy at the store, dealership, or wherever. When no one was there to mine the materials, to ship to the manufacturer, to shape the piece of aluminum into that boat hull to start making that boat, the chain link was broken and products could not be made.

Since traveling has been restricted, people have turned to other ways to spend their money such as home improvements, landscaping projects, new appliances and of course…boats. Thus, as things have begun to reopen, people have flocked to make their purchases as quickly as possible. Unfortunately, the situation is such that there has not been enough manpower available to produce enough materials to keep up with the consumer demand. This can be both good and bad. The bad news is that since supply is low, costs go up for the manufacturers, and ultimately you, the consumer. Rising costs can equal inflation. Inflation can eat into the buying power of your money if it gets too high. The good news is that this also means people are spending money, which leads to a growing economy. 

When it comes to your investments, inflation can also be both good and bad. If you are holding more fixed income type of investments, such as bonds, certificates of deposits, cash or money market, the income you are receiving from these investments may not make you more than the rise of inflation. On the other hand, if you are willing and able to take on more risk and hold stocks, dividend paying stocks have the opportunity to provide an income stream that may surpass the rate of inflation not to mention the potential for the growth on your investments.

In other words, we have options for our clients. Cliff and I actively review each client’s plan, portfolio and situation to provide them with the best recommendations based on their unique situation. Our advice and expertise is why our clients hire us. We are Kindred Financial Partners of Raymond James.

Any opinions are those of Kindred Financial Partners and not necessarily those of RJA or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Dividends are not guaranteed and must be authorized by the company's board of directors.