Regular readers know that we have been on the right side of this market for 11 months now. Subscribers to my investing newsletter, The Oxford Communiqué, are sitting on a pile of profits in our four portfolios (in addition to the gains we've already taken). Did we simply guess right about the direction of the market while the majority of investment analysts and market pundits guessed wrong, especially early in the pandemic? Not at all. We correctly analyzed the severity of the pandemic, the effect on the economy and the timetable for vaccines, while most COVID-19 "experts" and other pessimists were dead wrong. Eleven months ago, they told us it would take years to develop a vaccine and get it approved. Yet Moderna (Nasdaq: MRNA) developed a vaccine within two days of China posting the coronavirus genome online (and nabbed a triple-digit gain in my Insider Alert trading research service). The Food and Drug Administration approved it nine months later. The experts told us that distribution would be extremely problematic, that most Americans would be reluctant to get a vaccine that was developed so rapidly and that there was no guarantee that those who got vaccinated wouldn't still be vulnerable to the disease. The news over the past few weeks has been terrible for the naysayers. But entirely positive for us and our portfolios. A new Gallup poll reveals that 71% of Americans say they will get the vaccine, the highest percentage yet. Moreover, the Centers for Disease Control and Prevention reported that those who have received a second dose of the vaccine will not need to quarantine themselves if they come into contact with someone with COVID. COVID cases are down 77% over the last six weeks. Now many medical experts, including Dr. Marty Makary, a professor at the Johns Hopkins School of Medicine and Bloomberg School of Public Health, estimate that "about 55% of Americans have natural immunity." Add to that the number of people who have received the vaccine, approximately 15% of Americans. Bottom line? The country is racing toward herd immunity and an extremely low level of infection. In a recent Wall Street Journal editorial, Dr. Makary concludes that "Covid will be mostly gone by April, allowing Americans to resume normal life." In short, we are only weeks away from a robust reopening of the economy. Throw in ultra-low interest rates, cheap energy, and unprecedented monetary and fiscal stimulus, and we are set for the biggest economic boom we've seen in years. Goldman Sachs forecasts that U.S. GDP will increase 7% this year. Investors increasingly recognize this and are busy incorporating the positive outlook into share prices. That creates a risk, however. And it's a substantial one. | 
No comments:
Post a Comment