- - Thursday, January 7, 2021

We face a tough COVID-19 winter as supply chain bottlenecks slow vaccine rollouts, urban centers remain virtual ghost towns and the disaffected and jobless express outrage with demonstrations and dumpster fires.

Investors should stand steady. President-elect Joe Biden won’t turn America into France any more than Donald Trump could resurrect Midwestern manufacturing to Bavaria’s industrial stature.

A new Congress and president, I predict, will reckon with the plight of 5 million rendered permanently unemployed by COVID-19 with meaningful relief and flexibility for job retraining. As work from home institutionalizes, America’s cities will spread, become less congested and more livable in the bargain.

Wall Street narcissism embraces Democrats and socialists. The Big Apple’s two most prominent ambassadors to Washington are Sen. Chuck Schumer and Rep. Alexandria Ocasio-Cortez, but it fears the party of the suburban feminist might actually put its platform into action.

CNBC reported two-thirds of chief investment officers and portfolio managers it polled predicted the Biden presidency would be bad for stocks. Talk about liberal media bias caught red-handed — that cancel culture network was not flogging that sort of news before the election when it might have moved more IRA-investing viewers to pull the lever for Mr. Trump.

If history teaches us anything, near-term forecasts about the economy and stocks are terrible. It is easier to talk about whether piling into equities now will prove prudent 10-years from now than to discuss where stock prices — and your retirement portfolio — will be next year or even four years from now.

Disasters like the financial crisis and COVID-19 can’t be called even a few months in advance but the economy remains resilient and technological progress continues. Despite temporal setbacks, profits keep trending upward with globalization and the creative destruction of startups, bankruptcies and mergers continues.

Similarly, it remains that most folks can’t pick stocks. Who would have thought a year ago Tesla stock would be trading at about $700 and unable to keep up. with strong demand for its electric vehicles. While GM and Toyota remain in familiar places — flatfooted, clueless and making yet more bold promises about a future where they face diminishing relevancy.

Or that the FTC would bend to mob rule with an antitrust suit that poses an existential threat to Facebook but ignores Amazon’s small business shakedown tactics.

As we can’t anticipate pandemics or who the sovereign will sacrifice to the outrage of the masses, it’s best to overlook cyclical upheavals, skip stock picking altogether and gradually invest in a broad based index fund if you are optimistic that the country will do well over the next decade or two.

Stripping Google of its advertising monopoly practices and eventually curbing the creepy predatory practices at Amazon, won’t reverse the digital revolution in productivity — the virtualization of work, increasing emphasis on ideas over machines in value creation and the gravity defying resilience of democracy will continue.

Building the technology for the digital age is a two-horse race — China and America. However, President XI demonstrated by neutering Alibaba and Ant — simply because Jack Ma dared criticize Beijing’s banking regulations — that the fascist in the East can’t tolerate visionary entrepreneurs that challenge the intellectual primacy — not sovereignty — of the Chinese Communist Party.

Take a hard look. CCP marionetted state-owned-enterprises require massive subsidies — and now the party wants to similarly micromanage China’s high-tech sector.

America will find a way to thrive — AOC and the Squad will harass but not prevail. Enough youth will abandon mass indoctrination tanks — universities doling out revisionist history and Wokism — for technical programs. With or without a more enlightened immigration policy, America’s skilled labor will thrive and leave epithets of American decline to the intellectual sandboxes of academia and cable networks.

At least for the near term, investors are betting on all this.

On the last day of 2020, the S&P500 price-earnings ratio was 38. That’s well above its 25-year average of 26. However, we have good reason to believe the market will support higher P-E ratios — the global glut of savings and central banks printing money on mimeograph machines has interest rates on bonds depressed for the foreseeable future.

FactSet’s aggregation of prospects for individual companies predicts year-over-year corporate profits will be up 45% in the second quarter as the COVID-19 vaccine gains traction.

That would put the S&P500 P-E ratio at 25 and fairly valued by historical standards.

My advice remains: Put a portion of your pay each month into stocks, have a small cash hoard in Treasuries to see you through emergencies and retire in style.

• Peter Morici, @pmorici1, is an economist and emeritus business professor at the University of Maryland, and a national columnist. 

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