Posted on December 3, 2020 by Florian Buschek
Fellow Breakout Investor Scott Shuda has written about year end rebalancing as a danger for the stock market. Of course against this effect is another force, namely that the largest contributions to defined plans, retirement accounts, etc happen in December as well. However, we have already seen record fund flows
Further, the Economic Surprise index has peaked as we had much better news about the state of major economies and the vaccines recently.
So it is rather hard to imagine major advances in the S&P 500 in the short term. That would not be bad at all to digest the strong performance ytd despite the pandemic (or maybe because of it, with rates at 0, abundant liquidity and big government deficits?).