by Rick Ackerman
Here’s a stock-market scenario so outrageous that you may want to consider it, especially if you like longshot bets that are underpriced. Everyone is worried the election will produce no clear winner and that it will take months to sort out the results. Since Wall Street hates uncertainty, especially when the nation’s future is at stake, stocks would seem all but certain to plunge, perhaps even more steeply than they did last March. Consumer spending and capital investment would dry up, and America would be cast into an economic slump as severe as the Great Depression.
A serious flaw in this sequence of events is that, in point of fact, investors no longer fear uncertainty, no matter how grave. If we needed proof of this, we’ve seen the stock market shrug off a global pandemic and soar as though the U.S. economy faced little more than an outbreak of measles. Whatever the potential long-range effects of Covid-19, portfolio managers have goosed a high-profile handful of mega-cap stocks into the ozone, treating these world-beating monopolists as though they will continue to operate at full-tilt indefinitely.