One Year In: A Look at Saving Rates During the Pandemic
While working hours were reduced across the globe and many lost their jobs entirely, personal saving rates actually increased throughout the pandemic in many countries.
A personal saving rate is calculated as the ratio of personal saving to disposable personal income. Here’s a look at the U.S.’ personal saving rate over 2020.
|Date||U.S. Savings Rate|
The U.S.’ personal saving rate skyrocketed in April to more than 30%. After a dip near the end of 2020, the rate has jumped back up again to around 20% in January 2021.
With the most recent data from September 2020, many European countries’ savings rates were up, as well—the highest rate occurred in the Netherlands at 24%. Japan and the UK followed a similar trend as well, at 22% and 28% respectively.
The Pandemic Piggy Bank
Personal saving rates tend to increase during recessions and, more generally, either increase because of reduced consumption or a boost in income.
Without the same access to restaurants, shopping, and travel, it is somewhat unsurprising that a trend of increased saving rates occurred.
In the U.S., many have been putting a larger share of their disposable income into their savings as a precautionary measure. Additionally, while income has likely not increased in most cases, stimulus payments from the government have become much more widespread.
Overall, the typical saving rates have not changed; what has driven up the country’s rates has been prudence and government checks. Whether or not this will influence future consumption or will continue a trend of increasingly large nest eggs, however, has yet to be determined.
The U.S. will likely see an increased inflow of government support, as Joe Biden’s $1.9 trillion stimulus package has recently passed in Congress.
» Want to learn more? Check out our COVID-19 information hub to help put the past year into perspective
Here’s What $1,000 Invested in Vaccine Stocks Would Be Worth Now
Ever wonder what you would have gotten if you invested $1,000 into the different vaccine stocks at the start of the pandemic?
Vaccine Stocks During a Pandemic
It’s often said that with every crisis comes great opportunity.
While such catastrophes do create upheaval and uncertainty in financial markets, they can also lead to new opportunities for investors, as asset classes react to different environments.
Since the World Health Organization (WHO) declared COVID-19 to be a pandemic on March 11, 2020, the performance of vaccine stocks have been varied—but with some notable winners that notched triple or quadruple digit returns.
Here’s how much a $1,000 investment would be worth as of March 31, 2021, if you had put money into each vaccine stock at the start of the pandemic:
|Stock||Value of Investment||% Growth||Market Cap ($B)|
|Johnson & Johnson||$1,252||25.2%||$419.8|
The Business of Vaccines
The returns on vaccine stocks have varied greatly. They are staggering in the case of Novavax and Moderna, but also seem quite underwhelming, when considering the likes of Sanofi, AstraZeneca, and Pfizer.
One factor for the discrepancy in stock price performance is the revenue potential from vaccine sales relative to the rest of the existing business, as vaccine sales will have a much greater impact on the fundamentals of smaller companies.
For example, before the pandemic, Novavax had revenues of just $18.7 million—this meant that capturing any portion of global vaccine sales would create massive value for shareholders. On the flipside, vaccine sales are much less likely to impact the fundamentals of Sanofi’s business, since the company already is generating $40.5 billion in revenue.
To put it into perspective, analysts are expecting total sales from COVID-19 vaccines to be around $100 billion, with $40 billion in post-tax profits.
Vaccine Stocks vs the S&P 500
Even in a booming and valuable industry, it’s difficult to identify the long-term leaders. For example, in the mobile phone market, there was a time where the likes of Motorola, Nokia, and Blackberry appeared untouchable, but eventually lost out.
Similarly, with the limited information available at the start of the pandemic, few, if any, could have separated the winners and losers from this group with accuracy.
In the past year, the S&P 500 grew 44.9%—meaning that only three of the seven vaccine stocks have seen their share prices outperform the market.
Nobody said helping solve a global pandemic guarantees a pay off.
Bitcoin is the Fastest Asset to Reach a $1 Trillion Market Cap
Bitcoin is now part of a select very few assets that hold a market cap greater than $1 trillion. How long did it take to get there?
Bitcoin is the Fastest Asset to Reach $1 Trillion
The world is moving forward at an accelerated pace. Historically, it’s taken multiple decades for companies to be worth $1 trillion. For bitcoin, it took just 12 short years to reach such a milestone.
To help put things into perspective, here’s a look at how long it took America’s biggest tech companies to reach the $1 trillion market cap.
|Asset||Time To Reach $1 Trillion||Current Market Cap|
|Microsoft||44 years||$1.9 trillion|
|Apple||42 years||$2.2 trillion|
|Amazon||24 years||$1.7 trillion|
|21 years||$1.5 trillion|
|Bitcoin||12 years||$1.1 trillion|
Market caps as of April 12, 2021
Extreme Bullish Sentiment
Bitcoin has been subject to widespread commotion in markets.
At the start of 2021, the cryptocurrency had a more modest market cap of $500 billion, but has gained more than another $500 billion since. An onslaught of headlines has contributed to extremely bullish investor sentiment, including:
1. CEOs begin to show interest
Elon Musk and Jack Dorsey have made sizable investments in bitcoin through Tesla and Square, respectively. It’s estimated the gain from Tesla’s $1.5 billion bitcoin investment was greater than the profits from the entirety of their business in 2020.
2. New ETFs on the block
Multiple Bitcoin ETFs focused were recently approved by Canadian regulators and some have already launched on the Toronto Stock Exchange (TSX). For many years, the Grayscale Bitcoin Trust (GBTC) was the only readily accessible investment vehicle trading on equity markets that had exposure to BTC.
3. Financial institutions finally joining in?
Mastercard, Visa, and Bank of New York Mellon have made announcements to make it easier for customers to use cryptocurrencies.
On to the Next Trillion?
Future projections for the price of bitcoin are garnering more extreme and widening price targets.
The accelerated rate of change today has many of the Big Tech companies already inching closer to the next trillion in value. Will bitcoin follow suit?
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