Stock markets have bounced back to a record high from the March 2020 bottom, thus opening a fresh bull market on Wall Street expected to last for long. According to Bank of America’s Savita Subramanian, the focus for investors, more so fund managers that have been burned over the past decade, is small caps and cyclicals whose outperformance could last for long.
Markets bounce back and are in the earlystages of a Bull Run
Currently, getting promising investments is very important, more so if the market delivers lackluster returns. Markets have made a comeback following the March crash due to the impact of the pandemic. For instance, the S&P 500 bounced back quickly thanks to positive sentiment from forward-thinking investors looking beyond the pandemic turmoil and monetary and fiscal support from the government, which ensured resilience in the market.
Equity strategists Peter Oppenheimer indicated that we are currently in the early stages of a fresh bull market, changing to a longer ‘Growth’ phase with the emergence of strong profit growth. Oppenheimer said that the mix of policy support change shows a potential inflection point towards reflationary market conditions not witnessed since the financial crisis. The regime shift could result in a bull market in the coming months with critical market leadership implications.
Biden administration focusing on reviving economy rather than stock markets
With President Biden signing various executive orders, we will likely see some thematic changes and a deviation in market leadership. The current administration’s focus is job creation, real inflation, and reviving the economy instead of boosting stock market returns. The Biden administration will not look at the S&P 500 index or investment returns as a measure of success or failure.
According to short-seller activist Carson Block, markets are currently broken and were even before GameStop Corp (NYSE:GME). The reason is that investors are focusing more on technical instead of fundamentals. Therefore, to adapt to these broken markets, investors should consider technicals such as flows, which could seem tricky but a necessary play.