The week literally started with a bang this week, even as worsening news of the virus develops. One cannot make out where we will be heading next as winter arrives and Christmas could be cancelled for most of the western world.
Just before the US markets open on Monday, the new vaccine announcement hit the news wire – results show a better than 90% chance for 2 vaccines in development. The DJI index futures surged an unprecedented 1,700 points pre-opening as there was a mad scramble by everyone to load up. Buying the futures index was a good proxy to getting exposure to all stocks before the actual US markets open.
I was trying to make sense of the move and just became a bystander watching it as I could not figure out why a single piece of news could have such an explosive one-way effect on stocks. It seems like the machine algorithm black box machines have just decided to buy everything in sight. No one had a good handle in trying to explain this move.
The next day, while expected my portfolio to have a nice MTM (Mark To Market) positive number, I was in for a rude shock. My tech concentrated portfolio actually suffered a negative MTM! How could that happen when DJI showed a more than 1,000+ uptick? Reviewers were talking about this 6 to 25 SIGMA move as being incredulous and impossible in thousands of years, yet it has happened.
Searching for an answer over the whole of Tuesday, a reason finally seems to fit. The good news of the vaccine results was seen as a Hail Mary pass to a market that has seen multiple depressing data of COVID19 winning the war against humans. Cases were surging to new highs in Europe and America as Trump refused to concede defeat while winter approaches.
As I looked deeper into the gainers of the night, I saw that Carnival, the cruise ship operator was the top gainer and up 39%! My investment group chat also mentioned that there was a rebalancing of portfolios by investment managers. It started to make sense. The sure bet of tech stocks over the COVID19 months had become too crowded and the vaccine news created an abrupt change in group herd thinking that maybe there is light at the end of the tunnel now.
Brick and mortar businesses like airlines and malls could benefit if we could return back to the old normal. There was a rush back to these cyclical stocks which have been bashed for months. Many were underexposed to these sectors or had completely gotten out of the old economy, fearing a long and dark winter of COVID19. Tech stocks were sold off as there was a rapid switch out of them into traditional businesses on Monday.
I am still a pro-tech person as I believe that the virus has completely accelerated the push of technology into all aspects of our lives. Zoom, eWallets and cashless payments using contactless process, QR codes and the like will rule and be the norm now. This was just another opportunity for me to accumulate more new tech stocks like JFrog and Snowflake, cloud-based solution based companies.
As the week went on, the weight of new record cases slowed the momentum. Even Trump is now promising a longer Apr date instead of “2 weeks later” for the promised vaccine. He refuses to concede to Biden even as it becomes more obvious who won the elections as more states near their finishing lines. I find it incredulous that the GOP is still toeing the line that he needs more time to absorb the loss, like a kindergarten toddler throwing a tantrum and needing cooling off time. Big sigh…
It seems like the senate election races are still too close to call and it depends on the 2 runoffs in Georgia on 05 Jan. The Republicans still need Trump’s support to win these 2 seats and hence they have to still tolerate the whiny, little bitch (Bill Maher’s adoring term for Trump). Selling your soul seems to be on par for them, versus upholding democracy and a fair election. The lawsuits about voter fraud are being thrown out of court so fast that it is laughable, except that it is coming from the most powerful incumbent lame duck of the world.
How can Biden work effectively to address the critical virus pandemic which Trump had ignored if he still remains a sore loser? America is like a pendulum and always swings from left to right and back every 4 years. So painful to watch at times as they go to the brink of disaster in such a divided country now.
It was a week of catching up with family and friends for me. The business venture I have been talking to a few close friends is finally moving ahead. We decided to register our company and kick start the whole process of implementing the business plan now. This annus horribilis of a year called 2020 will finally end soon. Hopefully, we will get back to a recognizable normal soon.
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