What Clients Want to Know about the Vaccine’s Effect on the Market

The coronavirus vaccines are understandably causing a stir as the first (and now, some second!) doses are being distributed to frontline workers and high-risk populations, even if they aren’t yet available to the general public. However, there are a number of vaccine-related factors that advisors should communicate to clients when illustrating market uncertainty.

We’ve finally made it to 2021, and the whole world is excited to welcome the new year. As we bid adieu to the mess that was 2020, and with a coronavirus vaccine being distributed, now is the perfect time to prepare for a return to normalcy, right? Well, not quite, caution experts. When looking at global markets, the different rates at which covid is spreading or receding, and how vaccine distribution is being handled nation- and worldwide, there are a few points which advisors may want to mention to their overly optimistic clients who are ready to jump right back into their regular investment (and living) habits. The numbers don’t lie; the spread of COVID-19 in the US is increasing at alarming speeds. Though positivity surrounding vaccination is merited, it’s not quite time to get back to normal, even if the stock market has begun to look hopeful. Clients are likely to begin asking questions on when we can declare these “uncertain times” over (if they haven’t already), and advisors should be prepared to gently temper such enthusiasm with facts.

The coronavirus vaccines are understandably causing a stir as the first (and now, some second!) doses are being distributed to frontline workers and high-risk populations, even if they aren’t yet available to the general public. However, there are a number of vaccine-related factors that advisors should communicate to clients when illustrating market uncertainty. First, doses are limited, and will be rationed; it’s likely that we’ll see vaccinations become available to the general public beginning in April, while hospital workers and elders in long-term care facilities at first in line.[1] Secondly, the vaccines are generally two doses three to four weeks apart, and it may take several weeks after the second shot for the vaccine protections to take effect.[2] This means that the general population will start becoming effectively inoculated beginning in May and June based on current predictions, so it’s going to be at least six months before we see significant, possibly long-term economic recovery from the workforce “normalizing” (and we may have to adjust our idea of what’s “normal” as well). Thirdly, vaccine rollout has faced significant delays and hurdles; from doctors intentionally tampering with hundreds of doses to poor planning and timing, there are a number of ways in which nationwide inoculation has been stymied.[3][4]

However, even this may be a stretch; there are logistical challenges to consider in terms of creating, storing, shipping, and distributing the vaccine, and public reception has been mixed, especially from communities of color, which are also disproportionately affected by COVID-19. In a recent study done by the Pew Research Center, 42% of Black Americans surveyed said they would definitely or likely get vaccinated, compared to 63% of Hispanic, 61% of white, and 83% of Asian adults. Similarly, only 33% of Black Americans have a “great deal” of confidence in medical scientists compared to 33% of Hispanic and 43% of white Americans.[5] This is, of course, concerning; a survey done by the State of Black America in August found that positive COVID-19 test cases affected 1 in 1,450 Black Americans while it only affected 1 in 3,350 white Americans, and without effective immunization, these numbers could get worse.[6] While at first this attitude may appear counterintuitive, one must consider the long history of medical racism in the US, such as the Tuskegee Experiment, and other unethical medical practices (including forced sterilization and other eugenic practices disguised as medicine) that have been weaponized against communities of color in particular.[7] Taking this into account, it’s understandable why many view this vaccine with suspicion. There has been significant effort to build trust in the vaccines within these communities, however such reservations will also undoubtedly affect both communities’ recovery and that of the economy as well.

In addition to these valid concerns, there is also the anti-vax movement which has gained significant traction in recent years, as well as covid-specific misinformation campaigns. There are a wide variety of conspiracy theories circulating, from the false notion that the pandemic itself is a hoax, to the debunked myth that the vaccine will contain a microchip to track recipients.[8] Not only is the uptick in misinformation concerning in addition to the previously-stated personal consequences of refusing vaccinations, but the societal implications are as well, because herd immunity (when so many people are immune to a disease that the risk of interpersonal spread drops drastically) is a numbers game. “I would say 50% would have to get vaccinated before you start to see an impact. But I would say 75% to 85% ratio would have to get vaccinated if you want to have that blanket of herd immunity,” said Dr. Anthony Fauci in an interview with NPR’s Morning Edition.[9]

Knowing this, it’s likely that we could see vaccine-related economic recovery in the spring or summer of 2021 at the earliest, and a linear progression towards stability is never guaranteed. There are a host of factors that could alter the effect of vaccines upon the market, and it’s still too early to tell how this will play out. For now, advisors may want to coach clients that it’s still best to approach the market with caution, because if 2020 (and, frankly, the beginning of 2021) has taught us anything it’s to expect the unexpected.

[1] https://www.nytimes.com/2020/12/14/well/live/covid-vaccine-questions.html

[2] https://www.cdc.gov/coronavirus/2019-ncov/vaccines/expect/after.html

[3] https://www.nytimes.com/2020/12/31/us/spoiled-vaccine-doses-pharmacist-arrested.html

[4] https://www.nytimes.com/2020/12/31/health/vaccine-distribution-delays.html

[5] https://www.pewresearch.org/science/2020/12/03/intent-to-get-a-covid-19-vaccine-rises-to-60-as-confidence-in-research-and-development-process-increases/

[6] http://sobadev.iamempowered.com/sites/soba.iamempowered.com/files/NUL-SOBA-2020-ES-web.pdf

[7] https://en.wikipedia.org/wiki/Tuskegee_Syphilis_Study

[8] https://www.chicagotribune.com/coronavirus/ct-covid-coronavirus-vaccine-conspiracy-myths-20201215-ubpqu26xarh75gksodmqhgnrp4-story.html  

[9] https://www.npr.org/2020/12/15/946617217/fauci-it-would-be-terrible-if-people-choose-not-to-get-covid-19-vaccine

These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.

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