Five Drivers of Markets in a Biden Administration
The reasons to be bullish on stocks continue to mount.
The markets are getting complicated.
Photographer: Bloomberg
Which matters more to equities, valuations or the economy? This is not an abstract academic question, but rather the core of the debate between the stock market’s bulls and bears. Answer that question, and I can probably tell you what your portfolio looks like, and whether you believe stocks are going to go higher or are due for a major correction - or worse.
The problem with these binary debates is that they tend to narrowly ignore the complexity of markets. How quickly will the post-pandemic economy recover? Are we over- or under-estimating future earnings? Will investors still remain enthusiastic for equities as they get pricier? These discussions are subtly cloaked guesses as to what the world will look like over the next 12 months in a Biden administration, including whether these improvements in economic activity and corporate earnings are already reflected in market prices.