The major indices are at record high today to begin a thin-volume trading week, after a good trading week last week. All of what we've said about a Santa-Claus rally has become true. Although historically, we're due for some further gains, but what we want to tell subscribers is to not be complacent, take gains when you deem appropriate and don't buy just because you "think it's going up."

We'd like to provide an update about Omicron, and separately, our recent addition of Walmart (WMT) to our portfolio.

Omicron Cases Will Continue To Surge, But Will Peak In January

Evidence from independent studies continue to point that Omicron is more contagious (spreading faster) but less virulent (less detrimental to host) than Delta. In the US, data released last week showed Omicron to dominate 73% of Covid cases, and we believe the number for this week would probably be higher than 80%, making the Delta variant a thing of the past. We are seeing a surge in cases, with the daily case number higher than what we had in summer-fall period with Delta variant. Despite the surge, hospitalization and deaths are not anywhere near Delta's peak. This indicates vaccination works in protecting people from Omicron-induced severe illnesses. In the coming weeks, we'll get more systematic data from vaccine companies like Pfizer and Moderna on how effective their vaccines are against this variant. However, it is important to point out that at this point, market has priced out any Omicron-related uncertainties. On the S&P500, we are not higher than where we were the night before the news about Omicron broke.

Multiple firms have the same outlook as we do. Fundstrat today released a note stating their model forecasts that Covid cases in the US will continue to surge, almost doubling that of Delta's peak (>395,000), before peaking around 9 January 2021 and then substantially decline from there. They also affirmed that the bottom for equity markets surrounding Covid concern is already in (in other words, market currently is not pricing any Omicron scare).

Adding Walmart (WMT) To Our Portfolio

Going into year's end, we're sitting on a ~10% cash position from recent trimming of Salesforce and exiting out of Pfizer. In looking to re-position our portfolio accordingly to what we outlined here, we're utilizing some of the cash to start a position in Walmart (WMT). We started to own this name earlier in the year in the $140 (see post on 7 Jul 2021 here), and realized all the gain after its run in August to the $150. One pillar of our investment in Walmart was that it is a defensive name, meaning we want to own it when there are concerns about the economy. Currently the only true defensive name we have in our portfolio is Eli Lilly at 8%. We want another name and Walmart is a good choice because we've owned it before, we've done work on it. The other pillar we had at the time was because Walmart was an underperformer of the year (to date, it's down 3% compared to the S&P500 up more than 20%). That pillar still holds true today, as shares of Walmart is at the price level where we bought it in July.  

As a result, we're starting a position in Walmart, allocating 3% of our portfolio to this name. Our initial purchase has a cost basis of 139.94$/share, 1.2% of our portfolio. This means we can buy 2 other increments. Because it is a defensive name, we believe we'll need to leg into it rather more quickly. We will update you with more information in the coming days.

You can see our investment thesis in Walmart here.