In this week’s market update, we will review the craziness of Reddit short cover rallies that swept the stock market, its impact on volatility, and what that means for the health of the stock market. We will also review the health of the reopening trade and its relative impact on secular growth stocks that can prosper in a variety of economic environments. Lastly, we will compare the current bull market to that of the late ’90s and what that may or may not portend for the stock market in 2021.
The last year has presented challenges that few of us thought we would have to navigate, such as a global pandemic, U.S. political volatility, and now, Reddit bloggers wreaking havoc by igniting irrational and destabilizing rallies in heavily shorted stocks with little prospect for long term success. Fortunately for our clients, these types of stocks remain well outside the group of assets we consider investible. Moving forward, we remain focused on companies that are leading American innovation and set to disrupt their competition for years to come.
Robert Reaburn is the Executive Vice President and Head of Wealth Management at LifePro Asset Management.