What a year its been.
We went from record highs to new 52 week lows in record time early in 2020. Just days off the lows and the Wall Street Journal was declaring, much to the mockery of the investment community, that a new bull market had begun.
Oh boy were they right.
The move off the March lows has been nothing short of stunning. And each move higher has elicited commentary about a stock market bubble.
Just last week our FED chair continued to dispute that theory. He stated that the high P/Es were more indicative of low interest rates than a stock bubble.
The expansion of the money supply continues unabated as well. And if the the FED is not concerned about high p/e's and our government looks ready to dole out more $$ to Americans in the short to medium term... what does this mean for asset prices going forward?
$7 trillion+ and counting... not even thinking about raising interest rates for years to come... and zero concern about asset bubbles...... put all that data into the biggest computer and what do you think it will tell you this means for asset prices going forward?
— UPBOptionMil (@UPBOptionMil) June 10, 2020
... another crash is the answer you'd get from the same people who thought the market would crash every day since 2009.
Imagine being terribly negative on the stock market every day since March 2009, and waking up to new record high after new record high.
A virus comes in 2020 that shuts down the entire global economy. It's a scenario that is far beyond the wildest dreams of all the stock market bears....
they endured 3,950 DAYs of relentless market upside... record high after record high.. usually in the face of negative headline after negative headline...
and finally this! Its happening. And after 120 months of upside.. the greatest bear market ever was here... it was going to be glorious!! asset prices were going to ZERO!! finally... and in a cruel irony... that long awaited bear market that was going to last years, decades even... lasted less than 20 days....
and not only that.. three days later a new BULL market began!
my goodness!
So lets cut to it shall we.
The FED is not concerned about asset bubble, not concerned about inflation, not concerned about P/E ratios, not concerned about the housing price boom, and clearly wants to remain accommodative until the Virus abates the economy finds its footing.
The set-up is there for more upside in 2021.
Until we see interest rates start trending higher... cheap money will continue to mean cheap stocks.
Speaking of money... there has never been more..
Money supply exploded in 2020. And with more stimulus and COVID relief coming, that trend should continue. Think of money supply as the ocean and the stock market as boats on that ocean.
There are plenty of boats that have not risen with the tide. I've got a few and I'll share as we head into 2021.
For now...
Have a Merry Christmas.
and yes its going to be a welcome New Year. 2021 here we come.