Light at the End of the Tunnel
Investors may underappreciate what a game-changer a 95% effective vaccine is for the markets and the economy.
Ninety-five percent efficacy (the level of effectiveness achieved in the Pfizer and Moderna vaccine trials) is similar to the vaccines for measles or smallpox, diseases that are rare today. By contrast, the seasonal flu vaccine is often less than 50% effective, which together with modest uptake (less than half of American adults get the flu shot each year) explains why the flu still circulates broadly.
The upshot is that America, and the world, has a real chance of putting the COVID-19 pandemic behind it in 2021, assuming the vaccine can be rolled out and implemented widely. This should allow the economic recovery and bull market in stocks to continue. While America is not yet out of the woods and faces a precarious winter due to the virus, there is a light at the end of the tunnel.
We should pause to appreciate how quickly the vaccine was developed. Nine years passed between the isolation of the measles virus in 1954 and the introduction of a vaccine. The polio vaccine, famously developed in Western Pennsylvania, took more than two decades to create.
By comparison, the vaccine for COVID–a disease unknown to man scarcely a year ago–was developed in a matter of months. Human ingenuity has been applied in a manner and at a speed rarely seen.
The success speaks not only to resourcefulness of the scientific community, but more broadly to the inventiveness, resilience, and determination of the human race. It is this same spirit that animates the economy as people strive to make a better life for themselves. And itis this spirit, manifested in the vision and creativity of the private sector, that investors harness by owning stocks.
It is why, in our view, it is realistic to remain optimistic about the long-term outlook for stocks, even in the face of dire circumstances like the world endured in 2020.
