The Most Wonderful Time of the Year
As is normal this time of the year, things tend to slow down a bit between Thanksgiving and Christmas. Companies tend to report less, investors take time off reducing trading volume, and even the politicians seem to have less to say. While it may seem like there isn’t much going on, behind the scenes we’re rebalancing for the final time of the year, performing tax loss (or gain) harvesting, and gifting stock per our clients’ requests. It is a busy time, but one that we look forward to because it means the chapter is about to turn, and anticipation for the coming year grows.
To a large extent, really since the end of the third quarter, investors have been waiting on another round of stimulus. Over the summer the Democrats appeared to have the upper hand and played hardball. Since the election, it appears less likely the Democrats will control the Senate and have softened their stance. Unfortunately, given the turn of events, the Republicans have the leverage and are themselves playing hardball. I am hopeful we’ll receive a Christmas surprise, but I'm not holding my breath. Something smaller will likely come after the first of the year.
The good news remains that a vaccine is being rolled out in Europe and soon here in the United States. There will undoubtedly be some hurdles along the way, namely who gets the vaccine first and how does the vaccine get to where it needs to be as fast as possible. Additionally, some early recipients of the Pfizer/BioNTech vaccine have had adverse effects which could temper the initial enthusiasm until further data comes out. If you happen to suffer serious allergies, serious enough that you carry an EpiPen with you, I’d suggest holding off until more is known about the potential issues.
In company news, the general trend is a flurry of initial public offerings (IPOs) and renewed share buyback programs. Both DoorDash and Airbnb went public this week with investors enthusiastic about both. In their first day of trading, DoorDash and Airbnb closed higher 85% and 112% respectively. Worth noting, many public offerings shoot higher due to marketing hype and excitement, only to plummet back to earth in the months that follow. Also, they tend to be overpriced by the time they are available to the public. Also, worth pointing out is the number of companies increasing their share buyback programs. Under a new share repurchase authorization, Mastercard can now buy back up to $6 billion of its common shares. In like fashion, Raytheon authorized a $5 billion stock buyback program, the company’s first since 2015. While academicians generally don’t like the concept of a company buying back its shares believing there are better uses for the money, as investors, we love the practice and are encouraged to see the recent uptick.
I could go on about the final days of Brexit coming in the weeks ahead, or that mortgage rates remain at all-time lows, or that Brent oil topped $50 for the first time since March (hallelujah), but it doesn’t feel right during this time of year. Do you really want to read about increasing demand for antitrust litigation against social media companies, particularly Facebook? I didn’t think so. So, let me close this week with a terribly indulgent gift idea that seems both pretentious yet intriguing. For the audiophile in your life that has everything (and then some), I present to you the AirPods Max for a trifling $549. This is Apple’s foray into high-end headphones which cost a fortune, but seem to have impressed most review websites. While I am skeptical of all the techno-gadgetry, being a purist at heart, these seem to have found a rapidly growing following. Before you run out to buy a pair, you should know that they went on presale this week and sold out almost immediately. However, if you are in the market for something no one truly “needs,” these are worth checking out by all accounts. Now you know.
Bruce J. Mason, MBA