Dividends and Vaccine trail results will test US investor optimism

If you listen to the President, the vaccine trials are going to be here sooner than you think, probably very soon. In an article by Lewis Krauskoff of Reuters, according to a UBS analysis 40% of the market’s gains since May can be pegged to hopes for vaccines to protect against COVID-19.

We know every major pharma company is working on a vaccine and as individuals we hope that one or more will be successful. We know because of the shape and adaptability of COVID it is a very hard task. In normal times, arriving at a vaccine takes years of work and is one of the biggest factors which allow big pharma to have a 21 year monopoly on their drugs before generic drugs can be made and sold at a fraction of the cost. The normal life cycle of a new drug is years as it goes through ideas to research in animals to sampling of a few people, then more against a placebo then an even bigger number to ensure that the drugs works and has few side affects for the general population. Just about every drug has a side affect, the trials for people will tend researches which organ or organs are being affected with the new drug or under intentional consequences. The decisions mean only a few drugs are released every year and those that do can generate billions in sales which is the reason to invest in big pharma.

In the article, Walter Todd, chief investment officer of Greenwood Capital in South Carolina said any news to the contrary could be a risk to the market.

There are at least 30 vaccines currently being tested in humans according to the World Health Organization and Liz Young, director of market strategy of BNY Mellon Investment Management said, we are setting ourselves up for success in the sense if you you throw enough spaghetti at the wall, hopefully one noodle sticks.

The leading companies are Pfizer, Moderna, AstraZeneca, Johnson &Johnson and Novavax.

Once a vaccine is approved and that will be great news, the questions of how easily and quickly it can be distributed will arise and according to Art Hogan, chief market strategist at National Securities, the time line is expect to be longer.

Keith Parker, head of US and global equity strategy at UBS believes an approved, broadly distributed and accepted vaccine will send the markets up 8% or add 300 points to the S&P 500. A disappointing clinical trial could result in a loss of 3% or 100 points.

Linking to dividend paying stocks, we all hope there will be a vaccine sooner than later, but try not to listen to the optimism of the President. Vaccines take time, there is a process so the everyday person has confidence in the vaccine and the process. Do you have confidence in the process?

There are more questions than answers, till the next time – to raising questions.

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