Thread by @DougKass

From @realmoney on Thursday:
In my Diary and, again in yesterday's Bloomberg interview, I posited that stocks could rally spectacularly over the near term:
* With the perception, in part, of election uncertainty and the quicker spread of Covid-19, market participants have

been positioned defensively and cautiously.
* We have exited the weakest period of the calendar (August to October) and are entering a two month timeframe in which stocks are seasonally strong.
* We are ever closer to vaccine and therapeutic advances by the medical and

scientific communities.
* Should the market's rally continue, the evolving market structure change - in which the market is dominated by products and strategies that follow and chase price and price momentum - could catapult the markets higher rather swiftly. Remember, in risk

parity and other quant strategies, "buyers live higher and sellers live lower." They are and might continue to buy high.
* The Fed is totally committed to its current monetary policy.

A President Biden Without Onerous Tax Increases?

* There was no repudiation of President

Trump policy, nor will his devotees be cast out as lepers as some expected. While Trump may be emboldened, the slim margin and makeup of Congress will be something of a limiting factor, from a policy standpoint.
* The inroads of the progressive Left of the Democratic party were

overstated and roundly renounced in the election. A soul searching period of message and policy recalibration likely lies ahead for the Democratic party, who could seek a message that has broader appeal.
Regardless of outcome, it is clear that our country is divided and that wide

sweeping policy initiatives are unlikely over the next few years.
- Kass Diary, A Political Upset That Might Have Only a Limited Market Impact Over the Near and Intermediate Term?

The roots of our country's division, abetted by social media, have taken root over the last few

decades.
Without question, the animus and partisanship have grown exponentially in the last four years.
Whether it is one's view that President Trump sucked the oxygen out of the room and promoted a degree of divisiveness that made policy compromise with the Democrats impossible

or more difficult, or whether it is one's view that a Pelosi-led Democratic Party was too left leaning and resulted in the same lack of policy compromise with the Republicans -- the November Election has consequences and we can now look upon the potential promise that a

Democratic led Executive Branch and split control over the Congress could be a clearing event towards compromise that has not been seen for years.
The concept of checks and balances is one of the most important foundations of our government.
It should be emphasized that the

relationship between former Senator Joe Biden and Senator Mitch McConnell is not as bad as some believe. Many have forgotten that, in the second term of the Obama Administration the two (then) Senators actually had a successful working relationship. Biden and McConnell know

better than most how the Senate operates effectively.
Now, a divided government of a more centrally leaning Democratic Party than previously thought combined with a likely Republican controlled Senate is a potentially tasty cocktail of healthy stimulus and likely only modest

fine tuning and changes in individual and corporate tax laws (e.g., carried interest, 1031 real estate exchanges, etc.). Importantly, anti-trust moves against the market leading technology giants will likely be moved to the back burner of purgatory - though perfunctory

Congressional meetings will be held but without much teeth and little impact. Finally, interest rates may well be lower for longer now - supportive of higher valuations even despite slightly lower economic growth as the risk free rate of return used in dividend discount models

moves close to zero).

Raising S&P "Fair Market Value"

Based upon recent political, economic, interest rate, inflation events and factors, I am raising my "fair market value" for the S&P Index from 2800-3000 to 3000-3100.
While the markets are currently above my new "fair

market value", I have often written that markets spend most of their time below and above intrinsic value.
This may be one of the times in which equities are sustained for a while above intrinsic value.

Market Tactics

It takes nothing to join the crowd. It takes everything

to stand alone, and to buy when others are selling, and sell when others are buying.
The market is filled with reactionary strategists, commentators and other "talking heads" who are convinced that price is truth. Many of whom had expected a retest of the March, 2020 lows and

have been skeptical since. I know what it means to be "offsides" - its not a great condition to be in!
I believe that market structure, and other factors, has changed the game - rendering the value of charts today less than in the past.
In other words, price is not truth.
My

2020 strategy has been to take bold, anticipatory moves with an unemotional disposition.
This often results in taking unpopular positions and "going against the tide (of price)" in buying stocks when others are barfing them out - December 2018 and March 2020 were good examples -

and selling/shorting into complacency, speculation and over enthusiasm (early September 2020).
The hardest trade today is to hold and even buy the recent market strength.
I believe that the hardest trade may be the best trade.
I expect a continuation of the mother of all

short squeezes and a rip your face apart rally that began a few days ago to continue over the near term.
I am large net long.
@SquawkCNBC @cnbcfastmoney @jimcramer @tomkeene @lizclaman @andrewrsorkin @beckyquick @Sarge986 @carlquintanilla @bobpisani @riskreversal @ScottWapnerCNBC

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