Stock Market: Happy Thanksgiving 2021

(Drivebycuriosity) - Today the Americans celebrate Thanksgiving. The feast reminds of the pioneers who lauded their harvests and their survival in the harsh environment of the 17th century. This is the second Thanksgiving in the Covid-19 pandemic, but in the US anyone who wants it can get vaccinated, at least twice. And now are additional (booster) shots available which give about 95% immunity.

Investors also have plenty reasons to celebrate. The US stock market climbed in the recent days to a new all-time high. The S&P 500, the gauge for the US stock market, gained 23% year-to-date, 31% y-o-y and continued the positive trend of the recent years (chart below). 

 

 

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The stock market accompanies the seemingly eternally  rising company profits. Both are fueled by the accelerating technological revolution which got boosted by the Covid-19 crisis. It seems that the pandemic started a new Roaring Twenties, comparable to the boom phase which happened during the 1920s years after the Spanish Flu. 

Covid-19 accelerated the fundamental trends that have been shaping economy & society in the recent decade. During the pandemic the rise of the Internet gained even more speed and turned into a great leap. The pandemic reduced the resistance against technological progress (faz.net ). The crisis forced many people to work at home, to learn, shop, educate & entertain themselves from home. These trends are fostering digitization and raising efficiency & productivity of the economy. 

The virus boosts the digitization process, which is fostering productivity across all industries, leading to more economic growth. Microsoft`s CEO Satya Nadella said "the pandemic has proven the PC’s central role in keeping people connected, productive, and secure ...What we are witnessing is the dawn of a second wave of digital transformation sweeping every company and every industry" (transcript ). Last year Nadella noticed that “two years of digital transformation took place in two months” ( microsoft ). 

Online sales worldwide are surging, more people are working from home, they are binge watching Netflix & Amazon Prime, listening via Spotify, reading Kindle books, surfing Facebook & Twitter and businesses are running more & more on cloud computing. Home office & remote learning are raising productivity of the whole economy because many people spend less time with commuting. 

Not only consumers changed their behavior, companies were forced to adapt as well. We are witnessing an accelerated shift toward digital technologies that are faster, less expensive, more productive and raise creativity. Companies are compelled to streamline operations and they are using more & more Internet & and other software applications to get more efficient, creative & productive. The pandemic forced them to get faster and make their products & services cheaper and more convenient. These changes are accelerating the ongoing digitization process, using Internet and other software applications more intensely. The CEO of Bill.com, an online service, said: "We believe the ongoing pandemic has accelerated the need for businesses to focus on digital transformation” (seekingalpha).

Covid-19 made the companies much fitter and more efficient than before which translate into climbing profits. I believe that this learning process will continue and will fuel a long term trend of rising company profits & stock markets.

Happy Thanksgiving!