Will the Grinch Steal Investor Optimism?

Shah Gilani|December 21, 2020

Just when everything was looking like so many presents around the Menorah and under so many Christmas trees, the Grinch appears.

Has he stolen investor optimism, or is this just a smirky reminder that not everything’s right with the world?

Here’s what’s going on…

As 2020 Comes to a Close, Here’s What I’m Looking At

Not to worry, it’s just the latter.

Losing a couple of percentage points on the futures this morning and watching stocks open down isn’t the end of the world.

Top of mind, in the worrying department, is how a new strain of the coronavirus, originating in the U.K. so it appears, with a 70% greater transmission rate than bad old COVID, is freaking out a lot of investors.

It’s not that there aren’t already many new strains of COVID, there are, but it’s that this one is particularly unwelcome especially around the holidays.

On top of London and many parts of the U.K. shutting down, locking down, investors are worried about other countries banning flights from the U.K. They’re worried about supply chains. They’re worried about all this happening as Brexit nears, again.

Of course, the world’s worried, not just investors. What if the new vaccines don’t work on new strains? What will happen to economies if they’re shut down for a few more weeks, months?

It’s the holidays, and no one wants the Grinch to steal anything, though he just reared his ugly head.

But we’ve got “stimulus” coming again in the U.S. and probably a lot more coming when the Biden administration gets rolling. And there’s the spending on infrastructure, the environment, defense, cybersecurity, filling holes in social safety nets, and all the other policy prescriptions investors expect out of the new administration.

That’s reason enough to look at the Grinch and wink back at him, because better times are coming.

Your Capital Wave Forecast is still bullish, still constructive, even in the face of some ugliness.

There’s momentum on the market’s side, along with the vaccines, a new administration coming, and more money being helicoptered in shortly.

If you’re feeling a little down, as some folks do during the holidays, just remember what helicopter money meant to the markets in Round 1.

That money was thrown into the market; it was that money that lifted stocks off their March lows and kept elevating them every time there was a blip, because retail investors are now the tail-wagging dog.

Those hardcore, buy-every-dip retail investors are about to get another infusion of money.

Consider it Congress’s Christmas gift.

And as my mother used to say, “Never look a gift horse in the mouth!”

Happy Holidays!!!

Sincerely,

Shah

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