Have the markets forgotten about the 2nd wave?

The US Market movement – post COVID collapse

Earnings down, stocks up!  How strange indeed.  Trillions in stimulus will do that. 

Sadly, the arrogance (or ignorance) of a nation means many are back out to play – and that has led to a surge in new cases.  Thought the US market was essentially flat for June, the P/E ratio (a measure of the relative cheapness or expensiveness of a market) remains in the low 20’s based on 2021 earnings.  It appears the market is willing to give 2020 a pass at this point, as though things can’t get worse…even as certain states re-close

Over 125k US deaths, and 40,000 cases confirmed in one day alone.  We are seeing an incredible wealth transfer to the wealthiest corporations, and by default, their primary shareholders.  Gates, Musk, Bezos, Zuckerberg, etc.  What’s scary is much of the funds propping up the markets are coming from suspect sources – the fed, 1st time traders using stimulus cheques on Robin Hood, and alongside it, ETF inflows that drive all constituent stocks up regardless of value.  What is notable is the fed has only used a portion of possible operational facilities, so those waiting for a serious correction may be out of luck. 

While dividend payers and value investments are tempting, investors who have a 5yr + time horizon and can handle risk should ensure they have a reasonable weighting of growth investments in their portfolios – in particular, many Canadians are lacking tech exposure. 

Be forewarned though – high tech valuations mean that any big surprises could see them clobbered.  Over time though, many of the stalwarts have recovered – and more – after some thorough issues management.

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