We're Off to a Wild Start!

This year may be a difficult one to predict... SPECIAL OPPORTUNITIES [The Oxford Club Special Opportunities]( We're Off to a Wild Start! Matt Benjamin, Senior Macroeconomic Analyst, The Oxford Club [Matt Benajmin] Well, we're certainly off to a wild start this year! Last week, I wrote about how the market's performance each January is a relatively reliable predictor of what stocks will do over the full year. More specifically, the first five trading days of each year are a great early warning system for the full year. When the market is up over those five days (as measured by the S&P 500 Index), it also rises for the full year about 82% of the time, for an average 13.6% gain. That's according to the Stock Trader's Almanac. So how did stocks do in the first five days? When Events Shake Up Market Predictions Well, the S&P 500 was up 1.8%, which is not bad at all. In fact, if you look at the first five-day performance of all years since 1950, 2021 ranks at about No. 19. Of course, this year could be different. In post-presidential election years, this first-five-days barometer has been accurate 13 of 17 times, meaning that four times it gave the wrong signal. And the events of last week - during which protestors stormed the Capitol - suggest this year may be a difficult one to predict. Add to that the uneven and worrisome start of the COVID-19 vaccine rollout, as well as the recent surge of cases across the globe, and many market prognosticators could be forgiven for throwing any and all market predictors out the window. But interestingly, investors collectively shrugged off the shocking events. As you can see in the chart below, while the market fell initially in reaction to the scenes of Capitol Hill mayhem, stock prices recovered strongly the next day. They then pushed on to new highs. [Chart - The First Five Trading Days] Some observers were dismayed at the market's reaction. The New York Times was shocked (shocked!) that investors would continue to buy stocks in the wake of such an event. "The rally simply reflects the greed of bullish investors," [wrote New York Times financial columnist Jeff Sommer](. An Amoral Market But he's mistaken in that assumption. [Chief Investment Strategist Alexander Green had it exactly right]( last week, describing what the market is and what it is not. The market, Alex writes, "is not a political poll. It is not a public health proxy. It is not a measure of Americans' satisfaction with the electoral process." I would also add that the stock market is amoral. (And please don't confuse that with immoral.) That is, the market does not judge the morality of anything. Instead of being some kind of moral barometer, the market "is a minute-by-minute gauge of what tens of millions of investors believe lies ahead for the economy and corporate profits," Alex writes. So if not political mayhem and other current worries, what exactly are investors looking at when they bid up stocks in this way? Alex points to several factors in the current market... - Vaccines starting to roll out more effectively - Pent-up consumer demand that will drive consumption later this year - Ultra-low interest rates for the foreseeable future - Historically cheap energy - Potential major stimulus out of Washington, D.C. Clearly, the collective wisdom of investors is that those factors together point to higher corporate profits in the near term, and share prices follow higher profits. It's that straightforward. Of course, stock valuations at the moment are extremely high. Some analysts believe we're actually in bubble territory. And that calls for portfolio diversification. Diversification is something that The Oxford Club highly recommends. You'll see our strategists mention it time after time. But something else you'll need to think about when working on your finances is your retirement. It doesn't matter how old you are, at what point in your career you are or whether you think you should be thinking about your retirement. [The time is now.]( And Alex has what he calls the "Single-Stock Retirement Play" that could be the cornerstone of your golden years. [Just click here to learn all about it in this video.]( Enjoy your weekend and stay safe, Matt SPONSORED [Wall Street FEEDING FRENZY on 5G SuperStock!]( [5G SuperStocks]( One stock set record revenue in 2019 due to "booming 5G demand." The $3 stock is bringing in... get this... $340K per MINUTE! Wall Street is loading up. [Get the story on this 5G SuperStock right here.]( [The Oxford Club] You are receiving this email because you subscribed to Oxford Club Special Opportunities. Oxford Club Special Opportunities is published by The Oxford Club. Questions? Check out our [FAQs](. Trying to reach us? 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