Dear Transformity Ultra Growth Investor,

In the world of money management, relative performance perspective matters. The Wall Street Journal reports that the #1 performing mutual fund in America in 2020 was the Zevenbergen Capital Management in Seattle with 121% in their Genea Fund ZVGIX. The now-famous Catherine (Cathie to me--we go way back) Wood of the now $18 billion ARK Transformational Innovation Fund (ADNIX) was up 115%. She endorsed my first book ChangeWave Investing back in 2000 and I will never forget that.

In hedge fund land, Jim Davis (ex-analyst for hedge fund $billionaire legend Julian Robertson) has returned 94% in 2020 which makes him the top-performing manager by percentage. $Billionaire hedge funders William Ackerman at Pershing Square and Chris Hansen at Valiant hit 62.8% and 48% respectively, and they themselves increased their net worth by $billions.

But relative to Transformity Ultra Growth investors, those numbers are almost embarrassing.

When you add up ALL our profits from 1) Put Option Hedges (XOP, SPY, QQQ) from January 24 2) Profits took on existing positions we took going to cash Feb 23, 3) SPAC Warrants, shares, and options bought and sold 4) Profits took in non-SPAC stocks and 5) profitable positions we are still holding (how about CNHI--near all-time high!),

Here is the eye-popping 2020 performance for our TR Ultra Growth Portfolio (with similar results in our managed accounts at Transformity Wealth Management I might add):

YES nearly 60 years of wealth building in one crazy year--I'm still shaking my head.

And these results do not include our TR Ultra Income portfolio today at a 19.2% cash-on-cash yield from our 2020 purchases into the March Meltdown or the 108% TOTAL RETURN in our Ultra Income portfolio.

And finally, since our December 2 launch of SuperSPAC Pro Trader service, we have already booked 9 profitable pre-LOI/IBC trades and put/call option trades that, on average, have returned 126.5% returns per trade in just a few weeks. Our winners include LAZR trade with 5-to-1 return (or 11-to-1 IF you sold the put options as we advised) and 6 pre-reveal SPACS with averaging 78% pops on their reveal dates since we listed our pre-LOI "ARBPortfolio."

Note: IF you wanna join us in low risk/high gain SPAC trading, we are adding 100 new memberships to the existing army of SSPT SPAC traders---click here to get on this incredible action--there are only 240+ new SPACS looking for private UNICORN targets in 2021. I'll take our winner batting average any day! Click here to join before prices go up $100!

Here are the Ultra Income and Ultra Growth portfolio for further inspection--good idea to copy them and keep them handy:

https://transformityresearch.com/ultra-income-portfolio

https://transformityresearch.com/ultra-growth-portfolio

Our 73% annual return since 2013 (including dividends) is gonna quite a bump from this year!

How much? Well 73 x 6 +420 /7 = 122% annual returns from our Ultra Growth portfolio since 2013.

Transformity Research's Transformity Investor PRO is the #1 performing investment newsletter in America for the 7th straight year (Source Hulbert Newsletter Performance report 2020).

So how we gonna keep this rocket ship flying?

The 2021 Ultra Growth Investing Playbook for 2021: Find the Best IP & Best Intangible Asset-Based Business Models

Of course, there is a real cognitive dissonance as we research and write this TR Ultra Growth Investing Playbook for 2021. While we are amazed at our hard-fought-for financial gains in 2020 and proud to have stepped up and bought the most blown up stocks right into the March Meltdown (and proof once again that blindly putting your retirement portfolio into an SP 500 index fund is the WORST thing you could do with stock investing), the magnitude of death, the newly impoverished, dreadful small business destruction in America is equally as mind-numbing.

At last count, at least 8 million Americans have fallen into poverty--the biggest plunge in six decades. 85 million Americans report they have trouble paying basic household expenses starting with rent and food. There are now roughly 10 million fewer jobs than this time last year. By the time there is enough vaccination and warm weather in April/May, over 500,000 to 600,000 Americans will have perished from Covid-19 (including 150,000 nursing home residents and front line caregivers) with millions more suffering from the "long haul" symptoms like compromised pulmonary systems and being unable to taste.

In other words, the unthinkable has unfortunately become normal. Hopes and prayers are not enough.

One of the big investable themes 2021-2022 is that "Covid has acted like a time machine." In a matter of months, businesses and consumers made a decade's worth of changes in habits, priorities and "never again" promise. For example, clearly, Federal/State/County and consumer facing businesses in all countries will be collectively be spending $trillions to be like Hong Kong/Taiwan/South Korea who, because of their SARS virus experiences, were prepared for the NEXT pandemic.

Moreover, the next pandemic that virologists all refer to as the order-of-magnitude "REAL pandemic" virus yet to appear. "Never again" will the modern world leave itself open to the death and destruction of 2020.

Another version of this trauma is the "OK we underestimated the existential threat of a significant virus pandemic--we are not going to be "fooled again" and underestimate the existential threat of greenhouse gases and the existential threat of global warming. Between regulations again ICE transportation (internal combustion engines) in Japan, Europe, California and China kicking in by 2025-2028 and 2035, to the new $2 trillion Biden plan for decarbonized power in America, 60%+ of our sectors/spaces and stock investments will be related to the world's drive for renewable and sustainable energy. With "Green Bond" offerings now able to raise collectively $trillions to replace carbon energy sources with solar/wind and green hydrogen power, and $25 trillion in ESG factor managed funds (which we define as the consideration of environmental, social, and governance factors alongside financial factors in the investment decision-making process) a tsunami of capital is coming into the world's desire to decarbonize part and then all of their economies by 2030-2040 and 2050.

Another big investing theme/wave is the explosion in shared Biotechnology research (and the FDA new drug certification methodology) which is bringing a tidal wave of new biotech/DNA/Crisper/Genome and Genetics based treatments for the world's most deadly diseases.

Fast-growing software-as-a-service related to the digitalization of homes, work, health, education and government are the next macro sectors

To construct our 2021 Playbook, we have to move ahead and imagine what the world will be like in January 2022. We have to identify
1) the fastest-growing 3-5 five year CAGR secular transformations by sector and spaces
2) Identify the value-creating corporate and legislative transformations
3) Identify the primary sector and company beneficiaries of the post-vaccine post-pandemic economic Re-Opening
4) Understand the new marginal buyer of stocks and options in the US stocks markets--the Generation Z, Millennial, and Gen X investors/traders who primarily invest in sectors and companies that promise a better and sustainable future in 2030-2050.

But first, we need to establish our macroeconomic base case and theses which we have come to label "The Known Knowns + Known Unknowns" Starting from the 50,000-foot cloud-in-the-sky viewpoint looking down at Mother Earth here are our working economic assumptions for 2021, here we go.

First, let's never forget that there are basically $14 trillion reasons why equities trade at historically high earnings multiples--of course I am talking about worldwide central bank money injections of newly created dollars, yen, euros, and other currencies starting in late 2010 but exploding in March 2020.

It is true that the stock market is always about what will happen rather than what has happened, and it’s been highly profitable in the 2010-2020 age of Quantitative Easing aka QE aka creating and injecting $94 trillion of newly "printed" money in 2020 to buy bonds and other securities made it quite profitable to buy stocks whenever the market pulls back. Still, neither adequately explains the jaw-dropping 66% surge in the MSCI All-Country World Index of stocks from its low in late March, the record-low yields in junk bonds, the more than five-fold increase in the price of Bitcoin or any of the other seemingly inexplicable market moves. Except for one thing: the real answer to all questions about risk markets foreign and stateside comes down to one number: $14 trillion. That’s the amount by which the aggregate money supply has increased in 2020 in the U.S., China, eurozone, Japan, and eight other developed economies by newly created cash money.

To put the surge in perspective, with the recent $14 trillion rammed into the world's money supply, the jump of the world aggregate $94.8 trillion supply of money not only exceeds all other years. In fact, the collective $14 trillion money supply injection by the world's central banks blows away the previous record increase of $8.38 trillion in 2017, according to data compiled by Bloomberg.

Knowing what was behind the performance of markets is only part of the story; it’s also important that you understand the mechanics. The place to start is with the central banks, which were instrumental in printing all the money injected directly into the financial markets by purchasing bonds and other assets on a scale never seen before (FYI--they are not literally "printing money" of course--they simply push a button that buys bonds from Federal Reserve and Money Center banks paying for them by creating new money out of thin air--they buy real fungible assets with money they create out of thin air simply by pushing a payment button that sends the bondholder newly created electronic money and they get the real bonds for their reserves).

As of Dec. 30, the collective balance sheet assets of the Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England stands at 54.6% of their countries’ total gross domestic product, up from about 36% at the end of 2019 and about 10% in 2008, data compiled by Bloomberg show.

And let's not forget, the Fed alone is pumping at least $120 billion a month of newly created money supply into the financial markets through its monthly purchases of fixed-income assets and has NO PLANS to stop until 2023.

My point? Of course, since nobody wants to own bonds that pay next to nothing or even negative rates and are sure to LOSE VALUE as the world economy re-opens (unless they have to for regulatory or other reasons) as pent-up consumer and commercial demand for goods, services and commodities creates price and wage inflation (Did you know that today over half of US states now have a $15 minimum wage up from $10-12 just a few years ago), the result has been a scramble for yield, primarily for the debt obligations of companies and others with below-investment-grade credit rating aka junk bonds. Rising demand pushed yields on bonds issued by these companies to a record low 4.59% worldwide on average.

Now it does not take a Harvard MBA to understand that low yields from high-risk borrowers don’t offer a lot of compensation in return for lending money to borrowers at higher risk of default. After all, they’re not called “junk bonds” for nothing. This is why so much of the money that landed in the laps of investors this year found its way NOT into investment-grade treasuries and AAA-rated bonds but into the stock market and junk bonds.

The results? Pushing free money (after inflation) into global stocks pushed the world public equities value over $100 trillion for the first time and the average stock price for a member of the MSCI All-Country World Index to a stratospheric 31 times earnings.

Key Point: Too Far Too Fast: The MARKET NEEDS a REST! We have the "Grand Maestro" aka the Fed conducting a world orchestra of money supply expansion--and until they stop, the enchanting music is going to continue. We want to own leadership in our favorite spaces--see below. But except for TSLA and Apple, the PRICE WE PAY for stocks or MLPs or mREITS does matter!

Tactically, we get 5% or more corrections on average every 6 months--and our last 5% plus correction was September. As you know I keep every "52-Week High" report from WSJ every day--to measure the number of 52-week highs against 52-week lows. First here was the DAY of the 2018 bottom in WSJ on Dec 17, 2018--look at the new highs vs. LOWS--this is what a WAY oversold bottom looks like in the stock market.


And here is what a WAY overbought stock market looks like on Dec 24, 2020.

I have been keeping these weekly 52-week High/Low readings since 1999, I can tell you that this is the largest disparity of highs to lows...ever.

The Big Caveat: OF course the stock market records back to 1935 say IF we are up 10%+ in November and 10% in December (check), we will be up 10%+ in 2021. $4.5 trillion of cash still sits on the sideline and you never fight the Fed. And Lord knows IF the Zoomer/Millennials all get $1,400 checks aka free money on top of the $600 payments now being wired into checking and brokerage accounts, that money will go right in their Robinhood trading account and they will trade the hell out of that money.

Remember, individual investors opened 10+ MILLION new accounts in 2020--they are the new marginal buyer (and sellers) of stocks and options.

So what would bring us a 5%-10% plus correction in January? Right now the leading catalysts for a much needed 10%+ correction in the clubhouse are
1) Early 2021 profit-taking in the big cap and big winners of 2020 with a negative outlook for "anyone who wants a vaccine shot can get one " BS causes a sharp correction which spooks the Robinhood newbies
2) Democratic Senators take the Georgia runoff and Dems have majorities in both Congressional chambers (although great for the EV/ET/Hydrogen/Battery/Charging Station and infrastructure stocks.)
3) If the IPO bubble blows up. When does that happen? It happens like all other greater fool bubbles when eventually the market runs out of fools and a popular IPO deal blows up on its opening day.
4) Runaway Covid-19 infection rates from the new UK and South Africa strains (actually now 6 different mutations identified) caus mass reinstated lockdowns a few weeks by mid-to-late January
5) If we get a WAY overbought QQQ/SP 500 with RSI 80+ which sparks profit-taking in early 2021 on the market-leading winners (we are at 70 right now).
6) A quick overbought 5% down market move that, with a world record for stock market margin loans to individual households, feeds on itself (forced selling to meet margin calls) morphs into a real 10%+ correction with panic margin call selling to raise cash.

Action to Take: WE ARE NOT IN A RUSH to put new money to work --right now index technicals are just slightly overbought and not screaming top--but when insanely poor vaccination rates and availability were reported at 10 am today January 4th, the market reversed 4%. The highest flyer SPAC-to-IPO QuantumScape Corporation did the right thing corporately by registering 306 million shares to sell (although If I was CFO it would been at $120) and it cratered 40%. Profit-taking in the entire battery and EV charging space was LONG overdue.

Action to Take: Let's start reloading position at SP 500 Support: 50-day down to 357 or 100-Day 347 is where we will be buyers of that entirely healthy bull market pullback.

I'm actually more interested in the QQQJ or Next Generation QQQ stock index which better fits our Transformity Research sectors and companies: No real damage here but I'd love to get a break of its 20-day to its 50-day at 28.55

The entire stock market looks weak on very large volume--again support our thesis that with extreme levels of 52-week and all-time highs, some tax-sensitive investors are taking historic profits and building cash ahead of the Georgia Senate run-off election tomorrow.

But one good post-Santa Claus rally powered by $480 billion of $600 free money checks (and the potential for a $1400 top off later in January) post-election could get us to way-overbought-land in a classic January melt-up like January 2020!

In the bigger macro picture 2021, market-moving fuel comes from non-financial public companies that are sitting on $2.1 trillion of cash says Moody's. A lot of that excess cash in low capex companies will go to stock buybacks and acquisitions. Household net worth is up to $123 trillion with household debt just $16.4 trillion. Many $600 stimulus will go into YOLO Robinhood brokerage apps--and if that is followed with another check for $1400, the "Decarbonize My World Bro" stocks will soar again.

And then there is Bitcoin. Chainanalysis reports that big new investors have bought 50%+ of all the bitcoin this year at $11.5 billion. They also report there were 38 million transfers of $1000 or less of bitcoin transfers in 2020--nearly double that of 2019.

You can bet $billions of stimulus check $$$ will find its way to Bitcoin and Ethereum, too.

NOTE: The now giant BTC and Ethereum ETFs GBTC for bitcoin ETHE for ethereum sell for INSANE premiums >90% relative to the actual bitcoin and ethereum they actually hold. Investors are waking up to this--on Thursday this week the ethereum token was down .9% in value while the ETHE trust was down 9%. If you are going to own BTC/Etherum, own it directly

My point to all this? Technically this new bull market is still a pup--it started March 23, 2020--boy do I remember THAT day!

And I LOVE it when I start reading the "Value stocks taking over leadership of this new baby bull market? The best indicator of secular growth continuing to beat most "value stocks" like a red-headed stepchild is when the value stock cult leaders like John W. Rodgers, Jr. who is a died-in-the-wool "value investor" aka "I buy stocks when they are historically cheap and sell them when historically expensive" start getting WSJ/Barron's coverage.

Look--the one-way shift to an asset-light digitized economy in many ways is simply the next chapter of a process underway for a century: the dematerialization of the economy. As agriculture gave way to manufacturing and then services, the share of economic value derived from tangible material and muscle shrunk while the share derived from information and IP brains grew. Former Federal Reserve chairman Alan Greenspan liked to note that economic output has steadily gotten "lighter."

This asset-light intangible asset phenomenon is not another head fake or "this time its different" trap; in the 2021 economy value creation IS different than the history of value creation in the 20th century. For one thing, the asset-light digitally connected workflows and customer-facing connections become more valuable the more customers become a node on a digital platform aka the "network effect." In the digital age, value accrues to IDEAS, R&D, brands, content, and HUMAN capital--i.e., INTANGIBLE ASSETS that have become, in a value-creating sense, much more HIGHLY VALUABLE than mass-produced industrial machinery, factories, and physical assets in general.

Digitization doesn’t obviate the need for physical assets. Amazon’s U.S. capital spending in 2019 was more than any other company, according to the Progressive Policy Institute, a center-left think tank. Rather, it changes the sort needed. Online stores invest primarily in technology and logistics such as fulfillment centers and delivery vehicles, not stores, offices or machinery. Whereas retail stores are designed around customers who may browse multiple aisles in search of a few items, fulfillment centers are designed around employees handling items nonstop. They thus use labor and space more efficiently. The #1 performing restaurant stocks were Dominos and Wings--both deliver but Wings stores are just 800 sf--you can pick up or get delivered but no dine-in.

How much more efficient? Amazon’s sales per employee are 50% higher than Walmart's. Wings sales are 55% higher per employee than McDonald's. Hotel companies don't own hotels--they own brands and digital reservation networks. Tesla gets $8,000 for its self-driving software which, fully amortized in R&D cost, delivers a 97% gross margin per installation or virtually all the profit from making a Tesla. The physical world simply cannot compete with the 90%+ gross margin per unit economics of intangible assets with zero replication costs. But I swear-- whenever Mr. Brown is quoted in the Wall Street Journal or Barron's (like he was a few weeks ago) proclaiming that "Ten years from now, we posit that value shares will have TROUNCED growth" I KNOW the opposite will be true UNLESS we get another true growth stock bubble like the dotcom 1998-2000 bubble.

I will believe value stock outperformance when I see it--except for our Ultra Income stocks that acquire at prices that project the end of carbon-based energy in the next 3-5 years AND we are locked in with 12%-15% and even 20% annual dividends. AS I look around my office and home and at the most successful companies in the 21ST CENTURY all I SEE are technologies that I 1) can't work without 2) Don't want to live without and c) Allow me to live life with friends and clients and information sources in Europe, East Coast, West Coast, and Asia like we are still working together or socializing.

In 2020 cloud-based technology and biotechnology platforms SAVED THE WORLD as my friends and experts in biotech tell me constantly.

More importantly, the covid virus accelerated the shift to the asset-light digital economy. E-commerce platforms and e-commerce habits have intensified 5-10X into habitual behaviors in just. 90 days; that adoption period used to take 9 years. 3 out of 4 Americans tried a new shopping method according to McKinsey research, and 70% of them say they will continue to buy online for curbside pickup.

IN short, the e-commerce genie is out of the lamp and it is not going back in. Shoppers are not going back to shopping how they did pre-pandemic. Research says consumer habits can change are someone tries a new way of shopping after just 2 tries. Thus the pandemic HAS transformed and triggered dramatic shifts in consumer behavior.

My 72-year-old neighbor told me "Toby--I had no IDEA that I could just order my groceries online and they would deliver for $5! I am literally NEVER GOING INTO another grocery store again!"

What are the Lasting Consumer Transformations--are they investible?

So how are we going to beat the 7% annual S&P 500 returns in 2021 by our usual 10X outperformance?

Thought you'd never ask!

First, we have to start with the understanding that ALL human beings via evolution are hard-wired with a hierarchy of needs--remember Maslow?

Once we are over the hump on the pandemic in May/June 2021 and most who can work are back working, the innate needs that have been put-on-hold will certainly meet the definition of "pent-up" demand that will move to the top of the discretionary and non-discretionary consumer spending list. One area of big spending for households DURING the pandemic--endless hours of indoor entertainment content will peak of course.

WARNING: The BIGGEST risk to the real economy and the stock market now is the US Federal Government--you know the same folks who told us "It will be gone by Spring" and "Don't worry--one day it will just disappear." The last few weeks has proven the US Government has NOT improved its capacity to build upon the miraculous work of the private biotech sector in the aptly named "Operation Warp Speed." Late last week, the now normalized American Hunger Games approach to national vaccination distribution (pitting States against States and public health agencies against one another) showed us again that when it comes to public health emergencies, the United States of America operates like a third-world country.

The US is nowhere close to meeting its coronavirus vaccination goal for the end of 2020 and early 2021--which of course is raising concerns about how long it will take to immunize a vast majority of the American public and curb the pandemic. Operation Warp Speed, the Trump administration's coronavirus vaccine initiative, predicted 20 million Americans would get a coronavirus shot by year's end. Just less than 2.8 million people have received their first injections as of Wednesday morning, according to the US Centers for Disease Control and Prevention, and the US has shipped out about 12.4 million doses.

On a call with reporters on Wednesday, Warp Speed officials acknowledged that the rollout was running behind schedule--really? Just an hour before the CDC provided updated vaccine data, Warp Speed officials said they didn't know how many shots had been given to date, but acknowledged that the number was short of their goal."We agree that number is lower than we hoped for," Moncef Slaoui, Warp Speed's chief scientific advisor, said on the press call. Here is the problem. The slow vaccine rollout risks delaying an end to the pandemic and calls into question the timelines top government officials have offered up. They've said shots could be available to most adults who want them in the Spring.

At the current pace of vaccinations, it would take years for the US to immunize enough people to end the pandemic, Dr. Leana Wen, former Baltimore health commissioner, said Monday on CNN. "For us to reach 80% herd immunity through vaccination, it will take us 10 years at a rate of 1 million vaccines a week," she said. "Or, put in a different way, if we want to get there within six months, we have to be doing 3.5 million vaccinations a day, not 1 million a week."

The stock market profit-taking today reflects the risk that the US Government aka the "Gang That Couldn't Shoot Straight" is simply overmatched by the strength and extreme viral nature of the now 6 strains of Covid-19 virus.

Once a vaccine is widely administered and fear of the virus fades, some of this will reverse. The rapid return to restaurants every time restrictions have been lifted attests to the desire for physical presence, as does the yearning among many employees for brainstorming and gossip around the office coffee maker. Dematerialization can’t continue indefinitely; as social scientists all say, “Diminishing returns (with regards to virtual human interaction) works here as well. We can mimic reality, but we are not digital creatures ourselves, and..., our evolutionary background will continue to demand physical experiences.”

But once you have streamed great content that you now love on Netflix, Disney+, HBO+ on your streaming TV or device (ROKU or Amazon), many households with discretionary income will do what our household has done--upgrade your entertainment technology because your old stuff now bugs the crap out of you. Same with kitchen appliances--already Whirlpool and Frigidaire report 3-month backlogs for appliances because that crappy stove, refrigerator or washing machine that many did not use everyday now IS being used 5+ days a week.

That "I can't take it any longer--now that we cook at home more I need a new stove/stovetop/fridge/washing machine dammit!" has run its course (and in April we were too busy chasing a lifetime of profits in SPACS to notice the bottom! Doh!)

But the fantastic app-controlled wireless speakers and soundbars from Sonos have now become must-have entertainment technology in the home--especially when you finally go over to your friend's home and hear them! I know this because everyone who comes to our home and hears the Sonos sound goes out and upgrades their system if it's older than a few years.

SONO crushed Q3 sales and is now licensing their killer IP to other audio-visual companies (which Apple MUST do to stay up with them).
PS--go into any Best Buy in your hood--I went to 3 last week--SONOS speakers and speaker bars are completely sold out. Same at every high-end audio-visual store according to reports and at Costco.

The ONLY way you can get them tomorrow is to buy direct from SONOS.COM--so margins are going to skyrocket for Q4 2020 on the DTC sales. And the set-up at home is brain dead simple--they really are the Apple of wireless speakers and plug-in speaker bars.

Action to Take: Let's build a position in SONO 50% bite $23.50 or better on this bull market pullback/profit-taking get another bite if it pulls back to $20-$21 its 50-day price average and holds support there.

What new consumer behaviors are we NOT Buying: Basic consumer-goods makers. Growing beards, making home lunches, and wearing sweat pants all day has peaked. Sure we will make more coffee at home because people have formed new habits. But it's not enough of a transformation to deliver 100%+ annual returns. Most overpriced WFH (work-from-home) software and hardware plays--they have priced-in 5-10 years of 20%+ annual growth already.

We are staying away from community banks with commercial reality exposure--which includes most community and regional banks BTW. Unless there is a REAL wave of inflation that creates a world where banks can borrow money cheaply and charge significant yield to lend that money (the so-called yield curve where short term rates are held down by the Fed but fixed rated long bondholders become sellers which drives long term yield significantly higher) there is no significant transformation of their ability to make higher profits (and buy back their stock as they have done for a decade).

OK--so you get the drift. No reason to rush buying new stocks. Part 2 later this week we will update WHAT WE still own and what we will take profits on. Part 3 is our new sectors and stocks in the Decarbonize the World movement AFTER the GA Senate races are decided.

It's going to be another great ride in 2021--but it IS NOT GOING to be a 420% ride ok? We seem to get those every 10 years or so...this one was a doozy!

Toby

Next 90 Days: The Covid-19 Surge in January + February Will Happen But Late Spring/Summer Is Coming.
We follow Peter Walker and Covid Tracking Project, and they point to the 7-10 lag between holiday gatherings and major upticks in infections and hospitalization in January and into February. January will be very tough.

But the countervailing force, of course, is vaccination rates and citizen acceptance. As the rate of vaccination increases exponentially, as winter recedes the prevalence of infections (symptomatic and non) will decline sharply --especially with a new US President who takes this pandemic seriously and sets a positive example for all along with emergency declarations that speed up vaccine production and distribution.

Macro Economic + Earnings Power Forecast

Upbeat for corporate earnings: Margins are already back to pre-Covid levels as companies have been adept at managing costs and supply chains.

Result: 20% rebound in S&P 500 earnings in 2021 that takes EPS multiples down

Consumer: As the economy recovers, consumer spending will shift away from buying a lot of stuff—whether that meant toilet paper, canned goods or patio furnishings—toward experiences including eating out, travel and entertainment. Industrial: Capital expenditures simply because the average age of equipment is older than it has ever been. The likelihood of improved relationships with trading partners under a Biden administration could give multinational companies firmer ground on which to plan for future investments, she said.

IT and Automation: The big trends of 2020 such as more spending on public health, growth in the digital economy as people work more remotely, and a focus on automation and productivity, will leave lasting marks. Technology will account for an increasingly large share of capital spending. If companies bring production and plants back to the U.S. as part of an effort to have more control over their supply chains, automation will be one way to keep costs and inflation down.

Inflation: 25 states now have a $15 minimum wage--at the low end of the pay scale there will be wage inflation and higher energy prices which will be passed on to the consumer some way. As we like to say "some inflation canaries are starting to chirp,” because demand in some industries is strong enough for companies to raise prices, while their labor and input costs are increasing. We expect inflation rates of 1.8% in 2021 and 2.2% in 2022—in line with the Federal Reserve’s target of 2% inflation over the long term, and far from where rising prices would hurt stocks


TI PRO Overall Investment Strategy: Easy Money Has Been Made In Mega/Big Cap Stocks--we will use 5%+ corrections to buy long term LEAP options in the "Game Over Dominators" in IT Technology Opportunistically.