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September 16, 2020

Wealth Professional: Todd Morgan Quoted in "Fed has done 'spectacularly job' at saving economy"

"Fed has done 'spectacularly job' at saving economy" by James Burton, Wealth Professional.

Todd Morgan, of Bel Air Investments, said the market's a “rocket ship” projecting what’s going to happen in six to eight months when there’s a vaccine and people are back to work rather than focusing on the upcoming election.

He added that there are a few reasons why the market is up so high with the main one being the Fed’s huge rescue package that pumped trillions into the economy. This money has been spent on goods and services, like home refurbishment, while people have avoided travel and hospitality.

He said: “There are very few alternatives to investing in stocks. Income-related real estate has a great deal of uncertainty because of the lockdown. Bonds give you no return, especially after inflation and taxes. Common stocks are the most attractive. Millennials, who have been absent until now, have now started investing in the market. You also have people who have been sitting home bored investing in the market more than ever before.

“It reminds me of 1999 to 2000, when we had many housewives trading in the market. These housewives were outperforming many of the professionals when stocks were a hundred times earnings.”

Morgan also pointed out that, since 2000, there are half as many stocks because of the drastic decrease in the number of public companies from 8,000 to 4,000, meaning there is fewer inventory for people to buy.

He added: “The Spanish Flu in 1918 was followed by two years of lockdown. But the lockdown ushered in the age of the Roaring 20s. I think coming out of this pandemic, you are going to see people similarly truly enjoying their lives, spending money on new cars, new homes, new furnishings.”

Meanwhile, the chairman is neutral about the outlook of the market if Biden ushers in a Democrat government by defeating President Donald Trump. He doesn’t believe taxes will go up as much as Biden says because there’s too much uncertainty about the economy.

Instead, Morgan believes that, if Biden is in the White House, taxes will rise but that it will take a number of years and there won’t be an immediate impact on the individual.

He said: “Biden claims that corporate taxes will go from 21% to 28%, but that will be offset because I imagine that he will eliminate the Chinese tariffs, which are equally harmful to us Americans as they are to the Chinese. I believe that Biden will put one or two trillion dollars into infrastructure—roads, bridges, airports, waterlines, etc. This will mean more people will be put back to work.

“If Trump wins this election, I think the market will continue to go up. There will continue to be low taxes and more money will be available. If Biden wins, I think it will still be a bull market, just a slower bull market.”

Read the full article here.