My belief is that because the post-crash rally (late March 2020-present) was so blisteringly-fast, and because we are now already well above where we were pre-Covid in the markets, basically the entire Covid recovery, which is actually happening IRL in the next few months, is already priced in to the markets, essentially. The markets are acting like the economy has already recovered (and then some), but it hasn’t yet.

So when the economy actually does begin recovering, I don’t think we see a major jump in the markets. I just don’t. I think we trade sideways for a while.

For instance, take a company like Norwegian Cruise, $NCLH. In January 2020, NCLH was trading at $60. It dropped all the way down to $7 during the Covid crash, and now sits at $33.91. Most people would think NCLH should double this year as cruise lines begin reopening and the world goes back to normal.

But the thing is, in an effort to stay afloat financially (sorry), NCLH issued a ton of new shares in 2020. In April 2020, total shares outstanding stood at 214 million. Today there’s 315 million shares outstanding:

They basically increased the total float by 50% in 2020 with three major share offerings.

NCLH had a market cap of about $12.8 billion pre-Covid, but currently it’s at about $10.68 billion. This means that for NCLH to again hit that $12.8 billion market cap figure, it would have to hit a share price of $40.60, not $60.

And it’s already at $33.91 as of the end of trading on March 3.

So basically the market is saying that NCLH has recovered about 83% from its Covid collapse. But that’s clearly not true. NCLH hasn’t turned a profit in over a year:

They haven’t been operating for a year. They won’t resume operations until June 1:

It’s already been priced in. There is very little value to be had in NCLH, and probably all the other cruise lines, too.

This is what we’re seeing across the whole stock market. The recovery is already priced in. Once the world actually does reopen, we might actually be more likely to see a drop than a spike in equities. It’s like the past year has been one massive “buy the rumor, sell the news” event.

I know when I started buying stocks like crazy in late March of last year, my whole thought process was, “This Covid thing is temporary, everything’s gonna come back, this is the biggest no-brainer buying opportunity of all time.”

It’s already priced in, and then some.

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