Wit & Wisdom

“If we winter this one out, we can summer anywhere.”

Seamus Heaney, quoted in The Times (U.K.)

“As often as not, we are homesick most for the places we have

never known.”

Carson McCullers, quoted in the Mooresville, N.C., Tribune

“Having your book turned

into a movie is like seeing your oxen turned into bouillon cubes.”

John le Carré, quoted in The Economist

“Never trust the teller,

trust the tale.”

D.H. Lawrence, quoted in the Los Angeles Review of Books

“Calamities are of two kinds: misfortune to ourselves and good for

tune to others.”

Writer Ambrose Bierce, quoted in Lapham’s Quarterly

“A ship ought not to be held by one anchor, nor life by a single hope.”

Ancient Greek philosopher Epictetus, quoted in Forbes.com

“We look at the world once, in childhood / The

rest is memory.”

Poet Louise Glück, quoted in The Washington Post

drop in striking fashion; 2020 actually ended up being one of the five best years in NASDAQ history. Last year, the value of just five companies—Apple, Amazon, Microsoft, Alphabet, and Facebook—came to make up roughly 25 percent of the benchmark S&P 500 stock index. In other words, a lot of the market’s growth was driven by a handful of tech giants, while much of the market stagnated. However, with recent news around vaccines and an increasing sense that 2021 will at some point see the end of the pandemic, investors have moved toward sectors that were pummeled in 2020, such as banking and small-cap stocks.

So, is the economy reopening good news for the stock market?

It would make sense that as many U.S. businesses reemerge from their pandemicinduced hibernation, the stock market would follow. But the economy and the markets are not the same thing—2020 proved that, once and for all. And because markets generally look ahead, unforeseen bumps in the road can do some damage. A slower and more-chaotic-than-expected vaccine rollout, for example, could result in continuing bad numbers for businesses that had expected to roar back to life in 2021. Similarly, there are few things markets hate more than political uncertainty. Many forecasters assumed that with the end of the 2020 election some sense of calm would return, but the events of the past several weeks suggest that the ongoing political upheaval will continue for some time. Further turbulence could deal a blow to both the U.S. economy and the markets.

What about the IPO frenzy?

Last year was one of the biggest ever in terms of money raised through initial public offerings (IPOs), as companies such as DoorDash and Airbnb made their stock-market debuts. That fueled a lot of growth in 2020, and it may well do so in 2021, which also looks to be a busy year for IPOs. Putting money in IPOs can be tricky for average investors, however. Individual investors typically pay a substantial premium over the price institutions pay for shares in an IPO, and often the stocks make big initial splashes only to settle down or even drop precipitously. It took years for Twitter, for example, to return to the highs of its 2013 debut. On the other hand, Facebook, which has turned out to be a much bigger success story, languished for more than a year after its 2012 IPO before starting a fairly steady advance.

Are the trade wars over?

During the Trump years, the U.S. experienced a variety of trade tensions—with China, Europe, Mexico, and even Canada— and there’s good reason to believe that some of those conflicts will subside, as the incoming Biden administration will probably be less adversarial toward the rest of the world. China, however, will remain an economic rival, and U.S. companies could face headwinds there. Analysts, for instance, are closely watching to see if Apple will be able to maintain sales in China or will be pushed aside by domestic competitors. Investors have been eager to put their money into China’s growing economy, but China’s companies—even including the e-commerce giant Alibaba—have found themselves subject to Beijing’s unpredictable whims.