Episode 58: Regrouping and moving forward
Happy New Year and welcome to another episode of our market recap. As the week kicked off on Monday, it began with a sell-off and volatility. Wall Street suffered an ugly start to 2021 with the Dow Jones Industrial Average dropping more than 700 points at one point Monday. The Cboe Volatility Index, known as the VIX, jumped above 27 amid the broad sell-off.
But, as the Democrats were closing in on two senate seats in Georgia on Tuesday, investors bet on a possible Democratic majority. This meant more stimulus coming with a benefit to small-cap stocks because they are perceived as more reliant on the actual pace of the economy than larger shares.
On Wednesday, Democrats emerged as the winners of the Georgia election. In Washington, DC, electoral certification began for the acknowledged winner of the 2020 U.S. Presidential election, Joe Biden. At what was customarily a routine function of government, we all witnessed something never before seen in modern times - an incendiary assault on the process of U.S. democracy.
The images coming from the U.S. Capitol were nothing short of alarming. It is only now that I can consider how we should move forward. The stark, critical importance of government continuity - the formal certification of the presidential election - became crystal clear. I now understand and appreciate how the leaders of both political parties actively collaborated on ensuring this occurred despite the actions of a lawless mob.
And what was notable is that these events in DC happened simultaneously with Tesla, Dow, and Nasdaq reaching new levels.
When I started Pandocap, it was to explain the complexities of capital markets in an easy to understand format to people who usually don't have the opportunity to access them. During these challenging economic times, influenced by COVID, we see those who have lost their jobs, sectors of the markets are reeling and people are searching for new possibilities. It makes what we are accomplishing at Pandocap even more critical because education and innovation can elevate what they can accomplish.
I truly believe if many were able to access new opportunities through enhanced education, much of the unprecedented levels of misinformation coming from malign influencers would be successfully overcome. Toward that goal, I will continue to help traditionally underrepresented communities develop opportunities across all areas of the capital markets, providing inspiration and education to build a self-sustaining generation to make an impact on the world in which we live.
With that, there is a bright outlook coming from JP Morgan: "Their base case is an S&P 500 price target of $4,400 and our EPS estimate is $178 in 2021, rising to $200 in 2022. The equity price-to-earnings multiple is expensive in absolute terms but not when low rates and reasonable growth prospects are taken into account. The largest beneficiaries will be stocks at the epicenter of the pandemic, such as Consumer Discretionary, Financials and Energy.”
Market Close
Dow 30 31,041.13 +211.73 (+0.69%)
S&P 500 3,803.79 +55.65 (+1.48%)
Nasdaq 13,067.48 +326.69 (+2.56%)
IPO
Affirm, a San Francisco-based provider of personal installment loans for online purchases set IPO terms to 24.6 million shares at $33–$38 per share. http://axios.link/I1qn
Poshmark, a P2P used clothing marketplace, set IPO terms to six million shares at $35–$39 per share. It would have a $2.7 billion market cap, were it to price in the middle. http://axios.link/L8JH
We have a great interview launching next week with Udemy and two watch parties that will hopefully kick us off in a better direction for 2021!
See you soon.