A cure! (For high Zoom and Peloton stock prices)
“Not Pretty, Not Rich” is a newsletter about money, finance, and the economy written by me, Sam Becker. You can connect with me through my website, Twitter, LinkedIn, or send me an email at firstname.lastname@example.org. Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.
It’s Friday, November 13, 2020.
What’s shaping the world this week
The election’s over. But we’ll still be hearing about it for a while.
A jobs report, and ACA action: It came out after the newsletter last week, but October’s jobs report was released and showed the unemployment rate falling to 6.9%. Also, the Supreme Court also heard arguments re: the most recent challenge to the Affordable Care Act, and it looks like the law will survive. If it were struck down with no replacement, it could have been disastrous for millions of Americans.
Image: NPR, data from Johns Hopkins University
But there is some good news…
A COVID vaccine: The cure for high Zoom and Peloton stock prices
The announcement of a COVID vaccine had some interesting financial effects.
Just kidding. The major piece of good news this week was that there’s a COVID vaccine on the horizon, with purported 90% success rates. The stock market loved the news earlier in the week — look at all that sweet green:
But a few individual stocks did not:
This is basically the opposite of what we saw earlier this year, when stocks like Zoom and Peloton went through the roof, while others, like cruise lines, absolutely cratered.
While that may be interesting, the important thing here is that it appears we’re getting close to a viable, effective vaccine that should allow life to return to normal. Remain cautiously optimistic, of course, as things can always change.
But the initial data looks good from Pfizer and BioNTech, which announced the vaccine’s success on Monday. The key takeaway is that it looks to be 90% effective, but there are still questions as to whether or not it provides lasting immunity and how effective it’ll be among high-risk populations, like the elderly. That’ll get sorted out with time, but the news that we’re nearing completion of a vaccine was all it took to get people, and the markets, excited.
The other thing to keep in mind is that just because a vaccine exists doesn’t mean that we’ll all be able to get vaccinated. Officials say it should be accessible to most Americans by April of next year — but there could be some other hurdles to jump over, especially in rural parts of the country, where cold storage could be an issue. The vaccine needs to be stored at extremely low temperatures, and many hospitals lack the equipment to do so.
Putting that aside, this is good news. And with an incoming administration that is already taking the pandemic much more seriously than the current one, things may be looking up. That doesn’t mean it’s going to be an easy or fun next few months, by any means. Cases are on the rise, and with the summer months behind us, it means we’re all going to be spending more time indoors, increasing the likelihood of transmission.
But a vaccine, or even news of progress on an effective vaccine, is going to give the economy a shot in the arm. Consider, too, that most of us have adopted behaviors to reduce transmission — we’re social distancing, perhaps working remotely, sanitizing everything more often, and wearing masks. Medical professionals have also gotten more adept at treating the virus.
So, we’re in better shape than we were earlier this year, which is great.
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New data shows that Americans dipped into their 401(k)s to pad their finances.
We never really know how we’re going to react in stressful situations. This year certainly counts — back in March and April, it was unclear what was going to happen with the pandemic. Millions of people lost their jobs, and millions more started panic-buying toilet paper. It was a weird time, but interesting to look back and view our collective behavior now that some time has passed.
That goes for our finances, too. An analysis from Vanguard shows that Americans withdrew a median of $12,000 from their 401(k) retirement accounts. Under normal circumstances, those withdrawals would’ve incurred a penalty, but as a part of the CARES Act, the government altered the rules to allow for penalty-free withdrawals of up to $100,000. The data also shows that only 4.5% of Vanguard’s 401(k) investors actually took the disbursement.
As for the significance of the data, it looks as though the ability to tap into retirement funds in order to ride out the pandemic was something that a good number of people took advantage of — and that it was probably wise to change the rules to allow for it. We know that most Americans already struggle with saving money, and for some, retirement accounts were likely a lifeline.
It’s also somewhat surprising that relatively few people actually did dip into their accounts, all things considered. But the thing I think is worth ruminating on is that those who did make withdrawals are probably those who are already having trouble saving, especially for retirement. For me, having gone through the Great Recession and now the pandemic, looking at things like this is anxiety-inducing and altogether unhelpful.
But it makes me wonder what we as a society will do when, decades from now, we have a majority of would-be retirees who are unable to hang ‘em up because they lack the savings to do so.
All that said, listen to the experts: Try not to touch your retirement savings unless you absolutely have to.
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Numbers, links, and things to think about
$1 trillion: The estimated savings to the economy levied by a nationwide mask mandate.
10,000: The number of Bitcoins paid for two Papa John’s pizzas in May 2010. Today, that transaction would equal roughly $158.6 million.
Barry Ritholtz: “It is impossible to see where the Obama Economy ends and the Trump Economy begins.”
An increasingly common move by the world’s wealthiest people: Get the money, and buy citizenship in another country.
A lot of Latinos voted for Trump this year. One reason why? Those stimulus checks with the president’s name on them “which showed he cared about them.”
Speaking of which, don’t send the president money.
An interview with the CEO of Mastercard, who is actually doing a pretty bang-up job.
Finally, this is both pretty and rich:
Have a nice week,