Stock Market: Merry Christmas 2021

(Drivebycuriosity) - It`s Christmas again. Unfortunately the US & Europe are suffering another wave of Covid-19 infections caused by the Delta mutation and the even more aggressive Omicron variant. But here in the US anyone who wants it can get vaccinated, at least twice. And there are additional (booster) shots available, which apparently limit the severity of infections considerably. So, the mood is mixed.

Covid or not, 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 26% year-to-date, 28% y-o-y and continued the positive trend of the recent years (chart below). 

 

 

 

 

 ( source )

I stay optimistic for the stock market. Stock prices are accompanying the seemingly eternally rising company profits. They 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. The Covid-19 Pandemic changed many habits. The pandemic reduced the resistance against technological progress (faz.net ). The crisis forces many people to work, learn, shop,educate & entertain themselves from home which is fostering digitization and raising efficiency & productivity of the economy ( driveby ). During the pandemic the rise of the Internet gained even more speed and turned into a great leap. 

 

 

I suppose that the stock market will continue the climb in 2022 and beyond. Maybe we are at the begin of a new Roaring Twenties, comparable to the boom phase which happened during the 1920s years after the Spanish Flu. Companies restructured and reduced costs crisis significantly during the recession of the years 2008 and the recent pandemic in order to survive. They are getting fitter and more efficient than before. I believe that this learning process will continue and will translate into a long term trend of rising company profits & stock markets.

Merry Christmas!

P.S. The image above is created by Jeremy Miranda (American, born 1980