Happy New Year and welcome back to thoughts on the market.

I'm Mike Wilson and this year we're excited to bring you thoughts from even more of my colleagues at Morgan Stanley every weekday.

We hope you enjoy the new voices, new music, and same great market takeaways you've come to expect.

It's Monday, January 4th at 11.30 a.m. in New York.

So let's get after it.

2020 will be a year to forget for many who struggle with the pandemic's devastating health and economic impacts.

Furthermore, human beings are social creatures and one could argue the isolation from family and friends has been the worst part of this ordeal.

As we enter 2021, the second way... family and friends has been the worst part of this ordeal.

As we enter 2021, the second wave of COVID-19 remains on the upswing, with infection rates

and death still rising in many places.

Offsetting these headwinds is the recent passage of another substantial fiscal stimulus, unlimited support from Central Banks, and the distribution of several effective vaccines.

Unlike humans, financial markets don't really have feelings, instead they look ahead and discount what humans often can't see. In fact,

2020 may go down as one of the best examples on record of such vision. In late February,

markets began to discount a recession, with many stocks falling 50% or more in a month.

Then just as quickly, markets began to discount what would be the fastest economic recovery on record.

Fortunately, we were early to recognize as V-shape recovery. The risk reward of investing

is always greatest when fear is highest because valuation is cheapest. But this is no longer the case,

so we wonder what markets will start to discount next.

We think it's important to have the proper context at times like this.

First, we remind listeners that new bull markets born during a recession typically last for years, not months.

Second, capturing the best returns of new bull markets often requires

a steady hand that doesn't over-trade. Finally, the best returns often come from former laggards

...