Non-COVID world already baked into stock market: analyst

"We're especially seeing that today, now that the true Coronavirus-hit companies, like cruise lines and airlines, are coming back," Kramer said.

On high-growth stocks that delivered remarkable returns for investors in 2020, Kramer says they are yesterday's heroes.

"We're not going to continue to see every cloud and software company continue to rise because it's a play on a new lifestyle."

Video Transcript

YAHAIRA JACQUEZ: All three major Wall Street indexes are rising this Monday afternoon and even hit record highs earlier. This after President Donald Trump signed a $2.3 trillion pandemic aid bill that will provide economic relief for millions of Americans and will fund the federal government.

Here with me to talk about today's market action is Hilary Kramer of Kramer Capital Research. Thank you so much for being with us.

HILARY KRAMER: Oh, it's a pleasure to be here today.

YAHAIRA JACQUEZ: Hilary, we finally have a stimulus package, and investors seem to be pleased. What are your thoughts on the $900 billion, and how supportive will that be for an economic recovery?

HILARY KRAMER: Well, there'll certainly be a jump up in the economy, and that's why it's called stimulus-- because there's going to be a payment that everyone's going to receive, and that payment will go right into being spent for everything from food to rent to even some non-necessities. But it still means the economy is running. However, we have this dichotomy. We have this absolute disconnect between the stock market, which continues to hit new highs and has created this schism between the wealthy-- who have become the uber, uber wealthy-- and those that don't have money.

And so, it's-- in reality, we're not really solving any problem. We're not solving a problem. Yes, would $2,000 have been better than $600? Yes, of course it would have been. But at the same time, we need people to go back to work.

So my answer to you is, it has helped the stock market go up, but it's not really solving any of our problems.

YAHAIRA JACQUEZ: On that point, do you have any assumptions baked in on another stimulus package that we may be getting in 2021? Do you have any operating assumptions on that?

HILARY KRAMER: Yes. And the assumption is this-- that we are going on and the work that we do. We feel that the reason the market continues to rise is that a non-coronavirus world has already been baked into the stock market. We're especially seeing that today, now that the true coronavirus-hit companies like cruise lines and airlines are coming back. And we have seen real, actual travel.

Yesterday, there was as much travel as we have seen since March 15th. To me, that's really good news. And, you know, it's also been-- the experts have told us it's not the airlines and traveling that's making people sick. It's by not conforming to mask-wearing, or not being careful and small groups. So those are all good things.

However, we think-- and what we're baking into our assumptions-- is that-- and it wouldn't matter if it were President Trump, and it doesn't matter Democrats, President Biden. We have to see, and will see, taxes rise. It's just inevitable, because we are spending massive amounts. Anyone who wants to kind of get a sense of it-- in 2008, when we had the financial crisis, when we had-- we were at the meltdown of the entire global financial banking world, truly. We had one $1 trillion stimulus.

We have already spent more than $7 trillion on stimulus. We are going to see Treasury yields stay down low, at 0%, forever. Matter of fact, that's why our strategy is to buy banks, because the banks are making so much money. They borrow at 0% and a mortgage is at 3%. So they're making plenty of margin there.

But the banks haven't participated in this incredible rally that anything that has the last name of "cloud" in its title, you know, has accelerated.

- And we did see those companies deliver great returns for investors in 2020. If banks are what you're putting your money on, would you say that the glory days for those other companies-- the Zooms, the Teslas, that were able to deliver so much for investors this year-- would you say that those are over?

HILARY KRAMER: Yes. It's gotten as-- we were as frothy as we're going to be when it comes to the DocuSigns, when it comes to Zoom, when it comes to, even, the Teladoc, because also the competition has come in, and traditional competition has come in, as much as new players. So although we have Zoom-- you have Zoom-- you have companies like Zoom coming into the market.

But then, we also have Google Meet. We have Skype. We have Cisco. And so, there's just too much competition. And it will be a time that our world will change.

Now, commercial real estate may see an unbelievable, historic crash because there are companies that have no intention of ever going back to work. But it's not because of coronavirus, but because they've discovered-- corporations have discovered-- that they can-- the cost and overhead of having real estate and maintaining it is such an expense unto itself.

So we may see that there. But we're not going to continue to see every cloud software company and every coronavirus company continue to rise simply because it's a play on a new lifestyle.

YAHAIRA JACQUEZ: Yeah. And would you say that there are any companies that maybe people thought were gone for dead this past year, but that you would now think that they're undervalued and there's room for growth from here on out?

HILARY KRAMER: Crocs. Crocs. The plastic sandal shoes. Crocs has done an amazing job coming back, knowing how to advertise. Crocs is so popular again with the younger generation.

And Wall Street thinks it's over and done. And they're not realizing what's going on, which is that-- how sales are done today. I think that there's been all this kind of focus on advertising on Facebook, but when-- as you know better than anyone, Yahaira, it's really about TikTok. I mean, Dunkin' Donuts is so popular because of the Charli drink person who's on TikTok and followed by everyone.

And Crocs and so much has changed in the way advertising is taking place. And what was considered new advertising, which is on Facebook and Instagram, is really old-world advertising now. We're in a whole new paradigm moving forward. And the investors who are cuing into that are the ones that are going to make money.

So Crocs is going a lot higher. It's going tons higher.

YAHAIRA JACQUEZ: Yeah, and as you said, you know, it's a new world. And trends on TikTok are definitely part of that new world.

Hilary, thank you so much for being with us today. Hilary Kramer of Kramer Capital Research. I'm Yahaira Jacquez, and this is Reuters.