• The S&P 500® was up 3.71% in December, bringing its YTD return to 16.26%.
• The Dow Jones Industrial Average® gained 3.27% for the month and was up 7.25% YTD.
• The S&P MidCap 400® increased 6.37% for the month and increased 11.81% YTD.
• The S&P SmallCap 600® returned 8.16% in December and 9.57% YTD.
My personal commentary is based on crunching the numbers, connecting the dots, making some observations, and presenting some possible future scenarios, hopefully based on the statistics, but as Mark Twain said, “There are three kinds of lies: lies, damned lies, and statistics.” I’ll leave predicting the COVID-19 spread, treatment, consumer and business reaction, and political impact to others, but the statistics as I’ve seen them over more than 43 years at S&P DJI say we are paying a lot for expected earnings—even if we get the earnings we expect. Specifically, 2021 is projected (consensus operating estimates) to post a record year, as treatment fully overtakes spread and closures, with the forward P/E at 23 and the trailing 12-month P/E at 30. Even if we get those record earnings—an expected 23 over a year away—justifying that much of a premium is unprecedented. Maybe the new post-COVID-19 economy could justify it, and maybe crunching the numbers has made me focus too much on the underlying data, so I leave it to the market to justify and set the level. From the Feb. 19, 2020, pre-COVID-19 closing high (3,386.15), the S&P 500 has posted 20 new closing highs (33 YTD, as it closed the year with a high, at 3,756.07; the eighth time since 1928 that a year has ended in a high), closing up 10.92% from the pre-COVID-19 high and up 16.26% YTD (18.40% with dividends), after last year’s gain of 28.8% (31.49%). All I can say is, it’s been a heck of a run.