2020 is a year that will never be forgotten. The tragedy of the Covid crisis touched everyone in some way and the sorrow caused by many great losses will never fully heal.
Despite the tremendous challenges we faced in 2020, it was the best year of trading action since 2000. It was a year in which the small investor was able to outperform traditional Wall Street. Those that focused on stock-picking and navigating the price action produced superior returns.
What was most notable about 2020 was that those that approached the market with an optimistic and positive mindset tended to produce the best results. The easiest mistake to make was to believe that the endless negative headlines about Covid, the economy, politics, and many other issues would cause the market to collapse. Much credit goes to the Fed for its endless monetary support and to the President and Congress for trillions in fiscal support, but it was the power of positive thinking that made the biggest difference in the stock market this year.
Many pundits are forecasting a very difficult year for the stock market in 2021. They believe we will pay a price for the many excesses that we have enjoyed. Their arguments are logical and compelling and it is inevitable that the market cycle will eventually produce a significant drop.
Despite the negativity, I am highly optimistic about our ability to profit from the stock market in the year ahead. I am quite certain that the market is not going to go straight up and it is very likely that trading will be difficult. However, we will be able to profit from the many new opportunities that come from the inevitable ups and downs.
What should be clear about the market after 2020 is that the stock market rewards those that focus on price action rather than news flow. If we stay vigilant and monitor the action daily we can handle whatever might happen. We don't need the market to go straight up. While it is great when we have a strong positive run, we can also do well in more difficult environments if we work at it.
Let's wrap up 2020 and look ahead to 2021 with great optimism. I hope you will join me in making it the best year ever.