” … The Good News Is Already Baked Into Stocks.”

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Is it? Don’t buy this argument.

A more elevated view and longer-term perspective yields an entirely different picture.

Stimulus and low-interest rates worldwide seem under-appreciated as long-term drivers for the economy.

Using the analogy of baking a cake, we’ve just made the batter.

The World According to Forsyth

This was the take of the often acerbic, seldom correct, Randall Forsyth in this week’s “Heard on the Street ” column in Barron’s. (you will need a WSJ or Barron’s subscription to read) This must surely be the case now that Congress has finally reached an agreement on a new $900 billion round of stimulus … something we’ve been holding our breath for for the last thirty days. The market must certainly be ready to crack now that all the good news is out. Right?

Maybe. There is no question that the market is overbought. Normally you would get a pull back, a pause that refreshes before you move higher and I do believe we are going higher (maybe much higher). I will get back to this point a little later in my post. Question is, at what level will this correction or, even worse, cyclical bear market begin? My contention is that too many people, investors, and pundits spend way too much time and energy pondering this issue, focusing on the short-term while spending little or no time on the long-term outlook … the bigger picture.

Peering into the 10,000-foot view

Josh Brown, Ceo Ritholtz Wealth Management

Below is a bit of insight from two very smart investors, Josh Brown and Barry Ritholtz of Ritholtz Wealth Management LLC. (Excerpted from 12/20/20 Barron’s interview) If you don’t get why the market has done so well in the face of overwhelming adversity, this might help:

“Has the pandemic altered the way you think about investing? (Barron’s)

Brown: The thing is how outrageous the response in asset prices has been. There’s an argument to be made that the stock market is higher because of the pandemic than if 2020 had been a more routine year. It’s an affirmation of why we’re rules-based investors.

Ritholtz: Not only did you have to predict that a pandemic would occur, but you would have had to take it to the second level, which is that the Federal Reserve’s going to take rates to zero and that Congress, which cannot agree on renaming a library, would panic and pass a $3 trillion stimulus. That’s how you get to a positive year, despite all the terrible news. We never try to guess what’s going to happen. If we’re not making forecasts, we’re not marrying forecasts.”

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Disclaimer: The information presented here represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain ...

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