If you’ve been keeping up with the world of finance lately, you’ve likely read a lot about “meme stocks,” like AMC and GameStop. While these stocks were benefited by short squeezes that helped some early investors make a bundle of cash, by the time you hear about a stock’s rally, it’s usually too late to make any real money on it.
While these headline-grabbing stocks have made waves, the stock market itself is doing well across the board. This is a little less punchy, but it’s just as noteworthy. We’re only partly through February and the stock market has already outperformed some of the year-end targets that major strategists had expected.
Friday saw the S&P 500 close at 3,934, an all-time high, even as a deadly snowstorm blasted the middle of the US with freezing temperatures.
Investors Excited About Return to Normal
This movement suggests that investors are optimistic about the country’s return to normal in the coming months. Falling levels of COVID-19, ongoing vaccine rollout, and the new administration’s focus on crushing the virus have all led to increased optimism about the end of the pandemic.
Another function of the new administration, the focus on another COVID relief bill, has investors excited for a potential of increased spending in retail sectors.
Economic stimulus bills are almost always a boon for the stock market, as the money flowing out of the federal government greases the wheels of industry. This makes investing in retailers that will benefit from the coming warm weather and reduced lockdowns a smart move now.
Where to Invest Now
While some people get luck and jump on a cheap stock just before it explodes, this isn’t a long-term strategy for growing your money. If you’re looking to really invest and make money in the stock market, the best thing for you is a diversified portfolio on the S&P 500.
Index funds are highly recommended by strategists currently, owing to the positive outlook for the markets going into the middle of 2021.
The term “a rising tide lifts all boats” applies here, somewhat. As companies begin to take in more money from increased retail spending and the impact of the upcoming stimulus bill, the markets are likely to lift in a number of places.
The people who will benefit the most from this will be those who are investing in a healthy, diversified portfolio that covers many industry leaders. Growth likely won’t be explosive, but it probably will be steady and dependable.