What a month!

January 2021 - I do not recall whether I have experienced a more eventful month in capital market.  

1. Two days after my Jan 4's post of prediction of Georgia Senate race, Trump supporters stormed the Capitol, an unprecedented event caused by internal forces (Brits did "storm" and burn the White House and Capitol in 1814.
   
2. Four days after my "bold" 2021 prediction on bitcoin, it conquered 40K milestone, realizing one of my predictions, offsetting the miss in Georgia Senate race where two Democrats won the close ones.    
3. On the same day that I wrote my first 2021 blog, Moderna came back with a vengence, recovered lost ground and realized a whopping 65% gain in one month
4. Jan 13, GameStop stock began the unbelievable and again unprecedented run from 20$ to 325$.  Along the way, it mutates into Occupy Wall Street sequel.  Along the way, it formed Bang with AMC, BB, NOK.  The short squeeze even sprinkled to AAL, SBUX, and GM.  It might destabilize the existing financial system, augmenting a potential systemic risk.  However the us vs them battle is unprecedented at this level.  It has the same decentralizing effect as the very bitcoin

Here you go.  In just 19 working days, we have witnessed events of a lifetime.  Where do we go from here?  I am brave enough to bring out my crystal ball:

1.  GameStop rocket will stop climbing in one week and start downward spiral
   
2. Biden's relief package will pass with the $1,400 (not 2K) for the qualified and $300 per week extended to September
3.  Moderna will continue to go up and may double.  The U.S. government ordered 300M doses at 15$ each.  
4. February will be a tough month for the equity market
5. The real impact of GME saga is that it might have paved the path for more regulations, under which the general market unlikely performs well

So what to do with this unfriendly environment for equity market.  Vaccines!  Try to focus on vaccines, its impact, its stocks, and the industry it will for sure help.

 

2021 Looking Ahead

Trump's call with Georgia Secretary of State put a nail on the coffin of his presidency.  The Hawley, Cruz stunt would add virtually nil to the political landscape except that Josh Hawley might have inked his ambition to run for the next presidential race.  With this, all eyes on Georgia's runoff.  Or no runoff.  My prediction is that Republican will keep the Senate and the Street will be back to another rally till February.  Then all eyes on vaccines.  My prediction is that by June the U.S. will be a different country from the one wrecked by Trump's inability to manage or should I say to apply idiotic ideological mandates to let non-technocrats to screw up large scale programs one after another, the latest being vaccine distribution.  Biden's appointees are not necessarily all capable technocrats but still beat idiots like Navarro.  

If vaccine distribution logistic and manufacturing quality issues could be addressed, leisure industry will be the major beneficiary. There were a couple of attempts to run up these stocks last year but the market failed to maintain the momentum and instead money flew to high flyers subsequent to each of these rallies.  

I am not as pessimistic as the business world is flooded with cash thanks to the Fed.  Reading "Stress Test" by Tim Guithner, I re-confirmed my belief that the U.S. can always print itself out of any crisis as long as dollar is still the reserve currency.  However the zero interest money policy will push a lot more investment into crypto-currency.  And Bitcoin is the reserve currency - to quote Cathy Woods' words.  Etherum might be a distant second, just looking at the recovery curve - it only recovered to the 75% of the previous high as compared with Bitcoin making new high after another.  

So here are my crazy 2021 predictions at the beginning of 2021:

1. Georgia Senate race will produce one Democrat and one Republican which will allow Senate to maintain in the hands of Republicans
2. Market will generate >20% return if the rates are kept at the current level
3. Bitcoin will reach 40K
4. The easiest leisure ETF to bet on is JETS

2020 Stock Market Return

2020 has been a roller coaster to say the least.  The forecast could be absolutely brilliant on one day and utterly wrong the next.  The indices saw their historical high in February only to be matched by historical retreat in March.  The entire year return on stocks is 68.7%, overall 66%, which was actually lackluster when comparing with individual stocks.  The lower return in the portfolio, Netflix, had a higher return in 67% than my portfolio.  In fact out of 35 short term sales in the second half, only less than ten were good ones, all the rest being sold too early.  However it is still a good year in stock market return as compared with my goal of achieving 20% per annum, especially considering that holding those high flyers would have required at least twice the energy.  Could be better and should be better but I am grateful that out of such a difficult year I have increase the net worth.