I think we can all agree it's been a wild year for the stock market. In March we saw the stock market plunged 34% in a month. This was followed by the strongest bear market rally in US history and we just saw the best November for stocks since 1987.

(Source: Ben Carlson)

To give you an idea of just how historic 2020 has been, consider this. The last time the S&P 500 suffered a 30+% decline in a year and finished positive was 1987. With the new year now just a month away, here are the five things investors can expect in 2021, that will drive the stock market, and either cost you a fortune or make you one.

(Source: NYT)

There are currently 144 vaccines in development for COVID-19 with 57 in human trials. Of those Pfizer (PFE), and Moderna's (MRNA) are the ones most likely to be approved first.

• PFE has filed for emergency use authorization
• FDA committee is meeting on December 10th to look at the phase three data and potentially approve that two-shot vaccine, which appears to be 95% effective
• Moderna filed for emergency use authorization on November 30th
• FDA committee meets on December 17th to potentially approve that two-shot vaccine, also 95% effective

Johnson & Johnson (JNJ)'s single-shot vaccine is likely to file for emergency use authorization in January, and start rolling out in February. By the end of 2020, an estimated 40 million Americans could be vaccinated.

The bad news is that just 53% of Americans say they are willing to get vaccinated based on the most recent Morning Consult survey. That's up a bit in recent weeks. The good news is that 53% uptake and 95% efficacy would mean

• 50% national immunity
• + 20% to 30% natural immunity = 70% to 80% total immunity
• vs 60% to 70% estimated herd immunity

The most recent studies indicate that natural immunity lasts "six months to several years" and so the pandemic is likely to end in the US in late 2021. Mind you 60% to 70% herd immunity estimates from leading health experts does NOT mean "once you hit 70% the virus goes away". Herd immunity just represents the point at which viral transmission starts to slow down.

• in some US prisons, 98% of the population ended up getting the virus
• showing just how infectious this darn virus is

But the good news is that an effective vaccine is what's needed to beat this virus and allow us to safely reopen the economy, and kick off the best economic growth in decades.

(Source: MarketWatch)

The fact that the US economy is expected to contract just 3.5% in a year when Q2 GDP fell by almost 32% CAGR is remarkable. Even more impressive is that the blue-chip economist consensus, the 16 most accurate economists out of 45 tracked by MarketWatch, expect US GDP to return to record levels by the end of next year.

I monitor the weekly blue-chip GDP consensus each week and it has remained incredibly steady, despite all manner of scary and chaotic things occurring in recent months. Why is that? Because economists are confident that no matter who wins the most important elections of the 2020 campaign season, more fiscal stimulus is coming soon.

The $2.4 trillion CARES act was the largest US stimulus bill in history. According to Moody's, it's the primary reason we avoided a depression.

Right now tens of millions of households are suffering, and small businesses are reporting falling sales and rising layoffs.

But while the months of December, January, and February are likely to be the hardest for households and small businesses since May, there is a light at the end of the tunnel.

• Moody's base case forecast is $1.5 trillion in stimulus passing in February
• Mitch McConnel, current Senate Majority leader, says that at least $500 billion in stimulus is coming
• the Democrats passed a $2.2 trillion stimulus bill back in October
• if the Democrats win the 2 GA runoff seats this is the bill that could pass in February

Regardless of which bill passes, Moody's, one of the 16 blue-chip economists, has crunched the numbers and estimates that even $500 billion is likely to help the US avoid a double-dip recession.

• a 20% to 25% probability that JPMorgan (another blue-chip economist) estimates would cause a 22% bear market in stocks

How impressive is the 4.3% GDP growth that economists expect next year? It would be the best since 5.2% growth in 2000. Or to put another way, 2021 is likely to see the best economic growth in 21 years.

JPMorgan, Goldman Sachs, UBS, and Morgan Stanley, all blue-chip economist firms, have put out recent notes calling this backdrop of a vaccine + strong economic growth "stock market nirvana".

In part two of this series, I'll explain the other two key factors that are likely to make 2021 a great year for stocks in general. But more importantly, I'll show you which blue-chips are most likely to rise like a Phoenix from the ashes of this recession, and soar to new heights.

(Source: Brad Thomas)

These are the Buffett style "fat pitches" that can make smart investors a fortune, not just in 2021 but for many years beyond.

9 “MUST OWN” Growth Stocks for 2021

Why Investors DON’T Care About Covid-19 Anymore

5 WINNING Stocks Chart Patterns

SPY shares were trading at $366.21 per share on Wednesday afternoon, up $0.19 (+0.05%). Year-to-date, SPY has gained 15.41%, versus a % rise in the benchmark S&P 500 index during the same period.

Adam has spent years as a writer for The Motley Fool, Simply Safe Dividends, Seeking Alpha, and Dividend Sensei. His goal is to help people learn how to harness the power of dividend growth investing. Learn more about Adam’s background, along with links to his most recent articles.

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