Elon Musk Just Became the Richest Person

Why the Stock Market Can Continue to Grow in 2021

Elon Musk is now the richest person in the world, as of today (January 7, 2021.) Musk passed Amazon founder Jeff Bezos to claim the title. Musk is now worth $185 billion compared to Bezos at $184 billion.

Musk’s rapid growth in net worth can be attributed to how much Tesla stock he owns. As CEO and co-founder of Tesla, Musk has most of his wealth in Tesla stock.

Tesla has had an unbelievable 2020, growing over 700%. Tesla has started 2021 right where they left off, as the stock has jumped from just above $700 to $800 in less than a week. Tesla’s market cap is now at $750 billion. They may soon become one of the few companies with a $1 trillion valuation.

Adam Jonas, a well-known analyst at Morgan Stanley, raised his price target on Tesla to $810. Sure enough, two days later, it looks like it will hit that target any minute. Tesla’s growth has been unbelievable, but its strong start to 2021 can be an indication of good things to come for the stock market as a whole.

Why the Stock Market Can Continue to Grow

2020 ended up a great year for stocks. While we saw the market drop 30% in about a month, it came roaring back. The market regained its losses over the summer and was able to hit all-time highs.

2021 has already seen the market set new highs. All three major indexes have set record highs to start the year.

Part of the reason the market took off in 2020 was the injection of money from the Federal Reserve. In March, the government passed a stimulus bill of $3 trillion. And again in December, a new stimulus bill was passed, valuing $900 billion. This money has found its way to the stock market and helped drive share prices higher.

Due to several circumstances, there are reasons to believe more stimulus can be passed in 2021. With the Democratic Party expected to be in control in the Senate, House, and as President, they may have less resistance approving another stimulus package. And with the number of COVID-19 cases still surging, the opening of economies may be postponed. As the economy recovers slower than expected, many businesses may still be closed or limited. Millions of more workers are still unemployed now versus before the pandemic and it may take a while for employment to get close to what it was.

If all these circumstances remain, more stimulus may be passed. If so, it may inject another round of momentum into the stock market.

2021 has just begun. There’s reason to believe it can be a good year for the stock market. But remember,

Markets take the stairs up and the elevator down

Always be aware of bubbles and that things can change in an instant.