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The headlines — shocking and scary — tell the story: COVID, coast to coast. It’s spreading everywhere — everywhere, it seems, except one eight-block enclave in Lower Manhattan ...
“America Locks Down From Atlantic to Pacific as COVID Rages,” screamed Bloomberg on Tuesday.
“Lockdowns, Round 2: A New Virus Surge Prompts Restrictions, and Pushback,” blared a New York Times story.
The Philadelphia Inquirer was packed with details on its hometown’s shutdown of indoor dining, gyms, museums and more.
The Chicago Tribune had full of coverage of the Windy City’s new stay-at-home order.
In banner-red across its homepage, the San Francisco Chronicle advised “California tightens mask-wearing mandate to all settings outside home.”
Yet, on Wall Street on Monday, the S&P 500 Index hit a new all-time closing high. The Dow Jones Industrial Average did, too. And the Nasdaq Composite wasn’t far behind.
Indeed, amid Tuesday’s mixed action, the tech-heavy index was in the green, if only just, while the S&P and the Dow gave back some of their recent gains.
So, what gives?
How can we have U.S. daily caseloads soaring to nearly 167,000 ... and hospitalizations hitting a record high of more than 73,000 ... yet markets so exuberant?
What’s the message from Wall Street, and how should you incorporate it into your investing approach?
First, big money investors are looking across the deep economic and societal valley created by COVID-19.
They see encouraging vaccine news from the likes of Pfizer Inc. (NYSE: PFE, Rated “C”) last week and Moderna Inc. (Nasdaq: MRNA, Rated “D”) this week.
And they think, “Yes, 2020 stinks. But 2021 will be better. We’ll be able to dine out, visit our parents and grandchildren, book summer cruises and get back to some semblance of normalcy thanks to safe, effective vaccines.”
Second, they know that smaller businesses and Main Street are suffering. But they also know that Corporate America and Wall Street are grabbing market share — and benefitting from subsidies and other aid thrown their way by Washington and the Federal Reserve.
Is that “fair”? No. But that’s how our fiscal and monetary policymakers chose to structure the post-COVID bailout-and-backstop programs. Because the major averages are packed with larger corporations, they’re rising to reflect that reality.
Third, they know more stimulus is likely coming in 2021. If the Democrats can flip the Senate via the two Jan. 5 runoff elections in Georgia, it’ll come in the form of huge helpings of fiscal aid. If they can’t, the Fed will do the heavy lifting with even more money printing.
But, either way, something is coming.
That’s because few D.C. politicians — be they Democrat or Republican — advocate for tighter money, let alone spending discipline. Wall Street knows it, and it’s front running the flood of even more cheap money.
So, what should you do about it?
Well, my Safe Money subscribers have been positioned in defensive, higher-yielding, higher-rated stocks and ETFs for some time now. These investments benefit handsomely from prevailing market trends. And it’s not too late to get on board.
Click here to join us. At the very least, be sure you own a nice helping of dividend payers in promising sectors like utilities, health care and retail.
Note, too, that this pandemic is proving an enormous opportunity for certain businesses and sectors. One high-reward standout in this environment is cannabis.
Here’s the wisdom on weed: Extremely promising election results and optimism about future growth are propelling cannabis-related stocks higher. And that could mean enormous wealth-building opportunities for you.
Click here to learn more about this fast-moving story about a fast-moving sector.
Finally, don’t forget to stick to the same Safe Money strategies that have worked best since early 2018: Keep higher levels of cash on hand for future opportunities and risk reduction and maintain greater exposure to things like precious metals and mining shares.
We don’t know how the pandemic and the ongoing vaccine trials will ultimately pan out. If you stick with the Safe Money approach, your portfolio should perform well regardless.
Until next time,
Mike Larson
