Today we received some very good news in that Pfizer’s Covid-19 vaccine is supposedly proving itself to be 90% effective in the latest trials, which is quite a bit better than what is required to be deemed successful. This is an MRNA vaccine, which is a revolutionary technology that would greatly reduce the time it takes to develop vaccines if it proves to be successful over the long-term. Moderna has a similar one, which we should see data on soon as well. Clearly, we can’t understand the long-term impacts yet, but this is great news for the stock market and the economy. Hopefully we get a few good options to go along with the better treatments that are available.
Our portfolios are geared to benefit from normalization. We’ve been hurt by the work-from-home and lockdown environment, which favors technology and chain stores like Home Depot and Costco. The market is disconnected at extreme levels only seen in previous growth bubbles, where the most expensive stocks have far outperformed, while the cheapest have struggled. However, when these trends shift, that is a bonanza for us. This could very well be that inflection point, as it could be the impetus for normalization. While it could take months for the vaccines to be broadly distributed, the stock market looks forward. The initial reaction is value stocks are way up and many of the work-from-home names are down quite a bit. Below is a fantastic article that appears quite timely, which outlines what has historically happened during previous major market shifts. I’d strongly encourage you to read it if you have 5 minutes.