December With a New Party in Power
Last week, we looked at the seasonally strong month of December and what tailwinds were ahead. Recall, that there is also a small headwind which begins now when it blows. Should this soft patch develop, it is usually nothing more than a pause or mild pullback of a few percent lasting up to two weeks.
With a change of power in the White House, I went back and checked December performance. Since 1992, the bulls have a perfect record. Keep in mind that sometimes, other macro events hit the markets, but December is usually a quiet month for big picture catalysts.
Forgetting about the stock market currently being in overdrive and susceptible to exaggerated moves in both directions, December 2020 is “supposed” to be a plus or minus 2% month. That’s what the odds favor. But as we have seen time and time again with this market, it has defied the odds.
Please continue to remember that the stock market is trading like it is Q2 2021. That is why it is completely ignoring and has been ignoring record numbers of new Corona cases and hospitalizations. This has befuddled investors who ebb and flow with ideas of a crash for the past 6 months.
“It is not what the actual is, but rather, how markets react” – Paul Schatz