US stock market could be much more challenging in 2021.
Many " new " things need to be factored in......
New administration in USA....
New policies to be initiated...
New approach to deal with COVID-19
Higher personal / business taxes
Higher Capital gains taxes
Cancellation of keystone pipelines
IF you just add up the above....US stock market may not like some of the things and may react negatively in a hurry...
Many traders were getting used to following the tickers @ open or pre market or after hours and took its cues and jumped on board...
Normal stock market does not give any cues, it develops trading range over a long period of times..
Average gains in US stock market has been 8%.....NOT 40%+++ which we have seen in 2020....
It took stock market 20 years from 1999 Y2K boom to create and stabilize bust form 2000 total carnage...
Previously 1987 boom took 12 years to stabilize.....
Point IS it takes minimum 12 years to get another boom in stock market which we have witnessed in 2020.....
History is telling us to take a very conservative view of 2021 and going forward....
Many anticipated policy changes have been priced in and then some...be it solar or EV or stay home.. all these stocks have defied " gravity & logic "...they have gone too far based on PE or PS.....
They all need to come down to " normalized to below normal PE / PS "
This may take a protracted down trend as seen after 1987...famous October 1987 crash and more recent 2000 long slump or 2007 housing debacle......
Factoring history is a very good tool to stay connected with reality....
Do not risk too much going forward.....
Even energy stocks are ahead of its fundamentals never mind stay @ home stocks.....
Try to play rotation after pullbacks for a quick / small gains in 2021.....
Good luck with your own thesis and comfort level.
BLOG does NOT give buy or sell.
Saleem
6 comments:
Hi Saleem,
Last week: +5.80% (YTD: +11.31%)
Notable Leaders: EH MSTR GM GRWG SUMO HCAT
Notable Laggards: SNAP EAT
It was another stellar week in this nascent year despite the decline in most major indices. Stock picking seems to have found its footing, with fierce rotation some days, symptomatic of a bull market. I hesitantly think this market still has room to run with continuing easy money even as the economy starts to re-open and improve soon. My biggest fear is "running out of money" for all the new IPOs and SPACs - when those start to fail, it will present the first real decline we've seen in a while, but it remains to be seen whether it's specific to those stocks or if the whole market declines. This particular earnings season will be all about containing costs and restructuring businesses for the growth ahead. I expect the company profit machines to really ramp up come summer time.
Holdings: TPR SUMO FDX ELY GM EAT LITE MSTR HCAT SNAP COTY LUV SHOO PLAN GRWG SPWR AVAV, cash 0.0%
Stocktrader
Hi Stocktrader,
Last Week UP 5.02%
YTD UP 10.38%
Saleem
Hi Stocktrader,
Sold TECK yesterday in Toronto @ $25.36 Canadian.....UP 39 cents...
Portfolio AAL CCL MGM.....40% exposure
Saleem
Hi Saleem,
Good luck with slimmed-down portfolio! I'm sure you'll find new picks as opportunities present themselves.
Stocktrader
Hi Stocktrader,
Bought CNX @ $12.95
Saleem
Hi Saleem,
Nice grab at the lows!
Stocktrader
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