Last Thursday kicked off the second quarter of this year, and next Thursday is the dreaded Tax Day for millions of Americans. Being wedged right between these two dates, I thought today would be the perfect time to talk about money and markets. So, allow me to offer my big takeaways from the first quarter of 2021, as well as its implications for the near future.
In many ways, the first three months of this year were a mere carryover from the volatility that plagued global markets throughout 2020. The United States, along with much of the world, continues to struggle with COVID-19 recovery. But you’d never know it judging by the Dow Jones Industrial Average, which closed at 30,000 for the first time last November. Not even the storming of the U.S. Capital or the Suez Canal fiasco could slow American markets, as the Dow only saw minor drops at the end of January and the beginning of March.
But there was one stock that shot through the roof when everything else dipped in late January: GameStop. After sitting below $20 per share for the first two weeks of the year, the electronics retailer closed at a ridiculous $347.51 on Jan. 27, after a mischievous group of Redditors blew up its stock and forced Robinhood to briefly suspend trading.
As I predicted, Robinhood came out of the debacle unscathed. But I, on the other hand, caught a case of Reddit fever when I saw the WallStreetBets sub hone in on its next target: Sundial Growers. With so many states (including Connecticut) examining the legalization of recreational marijuana and its share price rising steadily through the first week of February, I really thought the Calgary-based pharmaceutical was going to be the next GameStop. As its value approached $3, I bought several dozen shares. But since the hedge fund managers were not going to be fooled by Reddit again, Sundial plummeted. As of its close on Wednesday, it sits at an abysmal $1 per share. I’m waiting for a slight bounce back before I inevitably have to sell my shares at a loss.
Of course, no discussion of stocks would be complete without the mention of Tesla. Elon Musk’s baby shot up to a high of $880 per share on Jan. 8, briefly making Musk the richest man in the world. Tesla has fallen a bit since then, and the panicked investors selling during the downturn have not helped the situation. Since dipping to $563 on March 8, the electric car giant has recovered gracefully; its value hovered in the high-600s this week. The lesson from this? Don’t put all your faith in Musk, but don’t count him out either.
The last, yet certainly not least stock to discuss is none other than Bitcoin. The popular cryptocurrency shot up in the first 2.5 months of this year, but it now seems poised to level off a bit. Not that “leveling off” means much to the average investor — Bitcoin is still going for over $56,000 a pop. But even if fractional shares are your thing, I would still hold off on Bitcoin until it inevitably drops a bit.
As for the future, the lingering of COVID-19 unfortunately means that international markets will likely remain volatile. But as people get vaccinated and more states follow in the footsteps of Texas, Mississippi and Connecticut by reopening businesses and cutting capacity limits, Americans have reasons to keep their money at home. Every country is in a different stage of pandemic recovery, so going global just doesn’t make sense for casual investors right now. (Perhaps I should have followed my own advice and skipped out on the Sundial debauchery.)
Obviously, this is all temporary. The Biden Administration’s tax reform proposals will likely reach Congress in 2022, and all investors know that higher taxes on the upper and upper-middle classes are not great for markets. But if a year of COVID-19 has taught us anything, a lot can change in a full year. For now, tread optimistically — but cautiously — in all of your investing endeavors.