It’s the last day of what has been one of the most challenging years our society has ever faced. A global pandemic, a spate of natural disasters, and one of the fiercest presidential elections in modern history were just a few of the things folks had to deal with this year.
We feel fortunate to have made it through… and we are eager to turn the calendar to the new year.
As tough as this year has been for society, you would hardly know it based on the performance of the stock market. Just look at how the S&P 500 has rallied since March:
We most certainly saw some rough patches throughout the year. But who could have imagined that with everything going on, the markets would be able to rally like this?
And yet, the last couple of days seem to have the year ending on a sideways note:
The shape of this two-day graph of the S&P 500 (courtesy of Yahoo! Finance) doesn’t quite give us the emphatically triumphant end to 2020 we had hoped for.
So what does this mean for what’s to come in 2021?
Sideways Year-End Markets: A Sign of What’s to Come in 2021?
I’m sure many folks are scratching their heads at all the ambivalence the markets are showing – especially since big wins felt so easy to come by during the historic month of November into the early part of December.
It’s almost as if markets perceived the November arrival of multiple effective vaccines as the immediate end of the pandemic. While it was a welcome sign, there is a lot of work to be done. The global vaccination effort is currently underway, but covid cases are surging in many places around the world – including in the U.K., where a more contagious strain of the virus has appeared.
Congress meanwhile has been arguing for months over a covid relief package that seems ready to pass any minute. It seems as though markets are getting impatient – and perhaps a bit disappointed that the bill will not include $2,000 stimulus checks, like President Trump had asked for.
The markets seem to also be anxious about the prospects of a divided government, with the next president set to be sworn in on January 20.
A Word of Caution: Be Prepared
Anyone who knows me knows that I’m a ‘glass half full’ kind of guy. I don’t get concerned about what will happen tomorrow or the next week. More than five decades of investing experience have taught me that success always happens one day at a time.
In November, we experienced what I like to call a “sugar rush”. We were busy taking advantage of so many great opportunities: stocks that we’ve been tracking for a long time made us some handsome gains. We even made the most of new opportunities that popped up on our radar. Overall, it was the best month of November for the stock market since 1928….
That year should stick out in your mind…
Like I said in November, the first step of a market meltdown is a sugar rush. I stressed the importance (like I always do) about taking things one day at a time. When you don’t, you get blinded by the mania gripping the markets.
So are there signs of mania out there right now? You better believe it. Let us count the ways:
– TSLA is now listed on the S&P 500 with a P/E ratio above than 100; it’s one of the
hottest stocks of 2020 despite what many consider an astronomical overvaluation
– 2020 saw the proliferation of SPACs, or “special purpose acquisition companies”; these
are shell companies that are formed before they make any revenue or even have a
product. More than $38 billion poured into SPACs in 2020, which is a record.
– It was also a record year for IPOs, with companies raising some $167.2 billion on IPOs
in 2020; this smashed the previous record of $107.9 billion back in 1999 during the
dot-com boom.
The dot-com boom burst the very next year in 2000…
Look, I don’t like to try to guess the future. I stick with what I see in the Seven Sisters and choose the best strategy one day at a time. That’s why I’m optimistic about what 2021 holds: because I have that power and the resources to make the best possible decisions every single day.
But what does concern me the most is that there are a lot of investors out there who are completely oblivious to all of the troubling signs that are out there. Many folks feel like they can “go it alone” after enjoying a hot streak in 2020.
These investors seem to think that every month in the stock market will be like November 2020. I can’t stress this enough: These investors are not prepared for the volatility we’ll see in 2021.
Wiping Out 2020 Gains?
A lot of my colleagues say that I’m a perma-bull, and that’s pretty much accurate if you ask me. But the reason I am this way as an investor has nothing to do with thinking everything is always going to turn out okay.
Rather, it’s because I’ve been doing this for so long. I’ve seen it all. I’ve made and lost fortunes (and made them back again). I know how to navigate the difficult times, and I’ve learned how to keep my head during “sugar rush” type market environments.
On top of all of this, I’m a lifelong student of the markets. There is always something new for me to learn. There are always things that I have learned that I can refine my knowledge about.
For me, that’s the best part of being part of DTI. To have all of these great investing minds under one building: it’s like I’m playing basketball with the 1996 Chicago Bulls.
Sometimes market conditions make trading stocks easier for anyone with any level of knowledge to generate easy income. Sometimes it’s turnkey – just a matter of going through the motions and collecting income like clockwork.
Other times, market conditions require a bit more savvy, experienced hands in order to navigate.
I’m not going to pretend like I know exactly what’s coming in 2021. But I do see enough signs out there to believe that we will see some more volatility. It’s going to be a more challenging environment than 2020.
The people who think they are ready to “go it alone” are in for a rude awakening in 2021. Some might see all of their gains wiped out before we even get past March. Me personally, I don’t want to see that happen to anyone.
Last Call for the Deal of the Year
2021 is going to be an important year to have experts on your side. No matter your level of experience in the markets, going it alone is not advisable.
That’s why we want to make a special offer for you to become part of the DTI family. This is your last chance to take advantage of the best deals of the year on some of our top services.
There are signs of looming volatility, and folks like Roger Scott, Jack Carter, Tony Saliba, Geof Smith, and others want to help you navigate 2021 for the best possible outcome.
Who knows? Maybe the 12 months of 2021 will all look like this past November. We’re not counting on it… but should it turn out that way, you’ll be much better positioned for success with the DTI team on your side.
We are extending our Year-End Sale through Midnight. Once we turn our calendars to 2021, all of our best offers will expire. Follow this link to learn more about some of the deals we are offering on our most popular products.
But hurry: These deals expire right after midnight on New Year’s Day.
Let’s make sure we count our blessings as we let out a sigh of relief to put this year behind us. Let’s be prepared to face the best (and worst) to come in 2021.
And like I always say…
I’ll catch you on the flipside,
Tom