I agree. But again, you are talking about stocks. The disagreement I had with GWB was about the economy as a whole. Not the stock market.
I think the economy will also take a year since we are still seeing growth though slow at the moment. Financial crisis led to severe structural weakness in the system. Right now we are dealing with job loss and reduced output for the economy. That can be reversed over the next year (not becuase of Biden, you know I dont claim the President has anything to do with these things). Will just take time to get going and reabsorb the unemployed and get the ship right.
Value stocks have been relatively unloved for 2+ years. Even when one is pointed out, like when I said BMO was good value a $60 Cdn ( and remained good value in the low $70s ), people have all sorts of reasons to say it's not good value. BMO is at $91.89 and pre-Covid it was around $104. I wouldn't buy it here there are better plays now but it was way better then cash at $60.
It's also listed on NY and has significant operations in the US on top of it's cash cow business in Canada. Funny you mentioned currency, Cdn $/US$ has gone from roughly 70 cents to 76.5 cents so an astute US investor could have bought it in Canada and done even better.
The stock market responds to injections of liquidity and moves a lot faster. The overall economy will be highly dependent on massive stimulus spending.
A shallow and quick recovery. Sure, buddy. Corporate America’s Cash Burn Problem Is Getting Worse A growing number of junk-rated corporations including Delta Air Lines Inc. and Royal Caribbean Cruises Ltd. are losing money even before they pay interest and other necessary expenses like taxes. They’re covering those costs with cash they still have and with more borrowing in the bond and loan markets, where investors are willing to bet that companies will recover relatively fast after Covid-19 vaccines arrive. In the latest quarter, the number of junk-rated corporations that borrow in U.S. dollars and lost money before paying interest and other required expenses, known as having negative Ebitda, reached an eye-popping 47, according to a Bloomberg Intelligence analysis. That’s nearly double the level in the second quarter, out of a universe of about 600 borrowers. These companies are doing worse than many other zombies, or corporations that have losses after covering interest expenses. In this case, the businesses are losing money even before servicing their debt. If they don’t turn themselves around, some could be part of another wave of bankruptcies next year. For now, the Federal Reserve is helping these companies limp along by keeping interest rates near zero and forcing investors that want decent returns to consider financing struggling businesses. But money managers won’t be willing to lend to weak corporations forever. Companies are trying to just hang on until life returns to normal. Read more: America’s zombie companies have racked up $1.4 trillion of debt Debt markets may not be paying enough attention to the risk of cash and financing running out, said Noel Hebert, director of credit research at Bloomberg Intelligence who did the analysis. And even if the pandemic ends sometime next year, businesses will have to deal with their growing debt levels and an economy that may look very different after Covid-19, he said. “We’ve got companies where we don’t know if they’re functionally okay or not because we don’t know what the economy looks like on the other side of Covid,” Hebert said. “You’ve got companies that need a fast solution to figure out how to make their debt levels work, and absent that, those are companies that over the course of the next year may need to file for bankruptcy.” Debt Drag Companies that came out of the last big downturn with higher debt loads ended up performing worse than their peers, economists at the New York Fed wrote this week. In this cycle, firms in industries like tourism, travel and hospitality could grow as much as 10% slower than in ordinary times, based on figures seen after the financial crisis and companies’ debt levels coming into this downturn, among other factors, the economists found. Junk bonds meanwhile have gained around 5.5% this year, after returning more than 14% last year, according to Bloomberg Barclays index data. “Debt investors are willing to cross their fingers and go, ‘OK you’re not profitable, but we think someday you can be again,’ which is a tricky way to invest,” Hebert said. Corporations including Delta, Royal Caribbean and United Airlines Holdings Inc. are among those that have seen trailing-twelve-month Ebitda turn negative in the third quarter. Many of these are in industries hit hard by Covid-19, including tourism and live entertainment. And some of those companies may be eligible for government aid. The bipartisan stimulus proposal that Congressional lawmakers released this week would give $45 billion of funding for transportation, including $17 billion for four months of payroll support to airlines. Representatives for Royal Caribbean and Delta declined to comment, while a spokesperson for United did not return a request for comment. Cash Flow Proxy Ebitda represents a company’s income before it pays taxes or interest on its debt, and ignores some expenses like depreciation and amortization, where the cash expenditure often came in prior periods. It can be used as a proxy for cash flow or earnings from the company’s main operating businesses. Bloomberg Intelligence looked at companies with negative Ebitda over the last 12 months. The 47 companies in the Bloomberg Barclays U.S. Corporate High Yield Bond index that posted negative adjusted Ebitda for the 12 months ended in September compares with just 26 in the second quarter. And they reflect only a portion of the firms currently burning cash, given that the analysis excludes most companies that aren’t public and corporations in the financial sector. By other, more stringent definitions, such as subtracting expenses including interest and capital expenditure from Ebitda, even more firms are turning in a less-than-zero performance. Normally, corporations with negative Ebitda are on the road to bankruptcy, because they aren’t earning enough to make even partial debt payments. But in this downturn, some troubled companies have been able to raise equity. And many have successfully borrowed billions of dollars from investors betting that companies will rebound when the pandemic is over, probably around the second half of 2021. For example, Carnival Corp. borrowed about $2 billion in November in the corporate bond market, paying an interest rate of just 7.625% on unsecured notes in U.S. dollars and euros. That compared with the hefty 11.9% yield it had to pay on debt secured by its ships in April, when investors were less confident in the timing of a return to normality. “What these companies are going through is temporary, that’s the bottom line,” said Kevin Mathews, global head of high yield at Aviva Investors. “If they’ve raised enough money in the market to survive until their business comes back, then those default rates aren’t going to be as bad as we thought.” By one measure, high-yield companies were able to cut their aggregate debt burdens in the third quarter. The ratio of total debt to Ebitda on average for high-yield companies ticked down slightly to 5.27 times in the most recent quarter from the historic high of 5.57 times in the three months ended June 30. Read more: Corporate America is choking on debt and imperiling the recovery But that improvement is largely because of quirks in how aggregate leverage is measured. Any company with negative Ebitda was removed from the figures because leverage becomes meaningless when that occurs, making the average look better. Also, a handful of companies left the index in the third quarter after filing for bankruptcy. There was also some improvement from a few companies that benefited from the pandemic and showed real financial gains, such as the strong quarter from consumer staples company the Kraft Heinz Co.
And the stock market is a reflection of big business. What drives the US economy is small business. It will be a long time,if ever, before small business recovers in this nation.