Stay Ahead With Robin’s Market Insight – Market Outlook 2021

2020 will go down in history as a year which seemed surprisingly easy to make money… on hindsight. It was also a year some amateur traders can boast that they beat the pros as buying on dips turned out to be the correct answer most of the time.

Dow Jones, Nasdaq and S&P are trading at their all time highs while the world seems to be scrambling to contain the onslaught of the virus, leaving thousands dead and the world economy in tatters.

There is a disconnect between the stock market and the economy.

While one may argue that the stock market is driven by the lofty expectations of armies of traders sitting behind their desks or the fiscal largesse of central banks, the assets bubble that was created has real world implications.

Rising inequality caused by the K shaped economic recovery is a ticking time bomb. The poor are hit harder than the rich during this pandemic. Working from home was not an option for many jobs that were eliminated.

Markets have also priced in optimistic expectations for global growth. This sets up investors for potential pain in 2021. The combined market value of equities and bonds is now $169 trillion as of 23 Dec 2020, almost double the world’s expected gross domestic product for 2020. Even assuming world output grows 5.2% next year, that will still leave a yawning gap between real world output and financial assets.