Quarterly Market Update 12.31.2020
Wow what a year in the stock market!
We started the year hearing about Coronavirus for the first time. Then the first Coronavirus death occurred in February in Seattle. Then the pandemic took over, causing States to shut down all activities. The market plummeted over 34% in March.
Since then, Covid has ruled the headlines, however the market has recovered solidly from the March lows, once again proving that "staying put" is the best course of action when market volatility spikes.
On the Covid front, two vaccines are in distribution. Front line health care workers and high risk individuals are being "jabbed" now. A third vaccine is expected to get approval shortly and two more are in third stage trials. During the second quarter of 2021 most of the country should be vaccinated. To this date, the vaccines are effective against all the strains of Covid. And the Covid re-infection rate is exceedingly small. Hopefully, we will reach herd immunity by the summer and can put Covid behind us.
Once we get closer to herd immunity, States will open back up causing the economy to experience a huge recovery.
We are past and through the volatility associated with the election. It was a very pleasant surprise the results did not create more volatility. The increased probability of a larger stimulus package and the impending economic recovery from Covid appear to be overriding any fears.
The outlook for the stock market in the short term is positive. However, as we have experienced a few times in 2020, the market may correct. A correction could occur anytime. The market is hitting new record highs every day. We have seen that when the market experiences tremendous growth, there are times when the market takes a breather and resets. These short term corrections are a healthy part of the growth process.
The States are going to re-open and the economy is going to experience a big recovery – causing the recovery stocks to recover. At the same time, the technologies we have learned to use during Covid, we are going to continue to use – so the stay at home stocks will continue to do well.
Please let me know if you have any questions.
