A few years back, as editor of a technology magazine, I interviewed Guy Kawasaki at the New Media Expo in Los Angeles, a trade show devoted to bloggers, podcasters and web designers. If you’ve never been to one of these expos, they’re a cross between a Star Trek convention and a punk rock concert.

Kawasaki is a Silicon Valley celebrity. More like a god, actually. He’s a marketing specialist, author and venture capitalist. While working at Apple (NSDQ: AAPL) in the 1980s, Kawasaki spearheaded the marketing of the Macintosh computer line.

As I observe the frenzied rise of the stock market amid a pandemic-induced recession, something Kawasaki told me comes to mind: “Defy the crowd. The crowd isn’t always wise. It can also lead you down a path of silliness, sub-optimal choices, and downright destruction.”

Indeed, contrarianism is a guiding principle of Mind Over Markets. And right now, the conventional wisdom is absurdly out of touch with reality. The pandemic is worsening, schools probably won’t open in the fall, millions of Americans are out of work and missing housing payments, corporate earnings have fallen into the cellar, and yet the bulls remain undeterred.

What’s propping up the market? For the most part, the Federal Reserve’s unlimited asset purchases. But the bubble can’t last forever. Below, I’ll show you an investment theme that will maintain its momentum, even after the bubble bursts.

Stick to the data…

For now, Wall Street’s revelry continues. On Tuesday the Dow Jones Industrial Average jumped 2.13%, the S&P 500 rose 1.34%, and the NASDAQ climbed 0.94%. As of this writing Wednesday morning, the three main U.S. indices were trading sharply higher, in large part due to rumors of a coronavirus vaccine. But investor giddiness over a possible vaccine overlooks the obstacles.

Before it can reach the public, any potential drug treatment requires extensive clinical testing, which involves meticulously monitoring outcomes in people. It also requires gigantic production facilities to mass-manufacture and distribute millions (perhaps billions) of doses. And a vaccine is only effective if used. Pervasive anti-vax sentiment makes it likely that a substantial number of people will refuse to take the vaccine. Just consider all of the people who refuse (sometimes violently) to wear a simple face mask.

When it comes to hype over a coronavirus vaccine, resist the lemming-like behavior of the stock market. Stick to the demonstrable data, such as earnings reports.

Second-quarter earnings season kicked off this week. First out of the gate: the heavyweights of banking. Financial services are a bellwether for the wider economy.

Wall Street is closely watching second-quarter corporate operating results, to see whether it’s possible for the economy to quickly recover from the pandemic. So far, the earnings picture has been mixed.

JPMorgan Chase (NYSE: JPM) on Tuesday posted second-quarter earnings per share (EPS) of $1.38, exceeding the consensus estimate of $1.04. Citigroup (NYSE: C) reported EPS of 50 cents versus the expected 28 cents.

Wells Fargo (NYSE: WFC) was the laggard, posting a loss of 66 cents a share, worse than the 20 cents a share loss expected by analysts. It was the bank’s first quarterly loss since the Great Recession. All three banks set aside considerable loan loss provisions to cover anticipated defaults from the economic damage wreaked by the coronavirus.

Financial institutions are hoarding more capital to cover losses on business and real estate loans, as well as consumer loans. Banks also are earning less from lending because interest rates are so low.

Net interest is falling across the board in the banking sector. A key metric for banks, net interest margin measures the return on investments relative to interest expenses. The overall trend of falling net interest margins is spawning worries that lower interest rates are a drag on bank profitability.

Banking is a “spread” business. Banks profit from the gap between the interest rate they receive on their assets and the rate that they pay on liabilities. Net interest margins fall as loans are repaid at lower interest rates.

Overall, research firm FactSet estimates that the S&P 500 will report a year-over-year decline in earnings of -44.6% for the second quarter. If -44.6% is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings reported by the index since Q4 2008 (-69.1%). For Q3 2020, analysts are projecting an earnings decline of -24.9%.

Goldman Sachs (NYSE: GS) made a dire prediction this week that’s worse than the consensus view. The giant investment bank expects S&P 500 earnings to plunge 60% in the second quarter, the biggest decline since 2009 during the financial crisis.

However, belying its pessimistic earnings outlook for the S&P 500, Goldman Sachs on Wednesday posted earnings that blew past expectations. Goldman generated EPS of $6.26, crushing the consensus estimate for EPS of $3.78, fueled by the strength of its trading division. Goldman’s blockbuster earnings report provided a major impetus for the market’s upward trajectory Wednesday.

Watch This Video: 7 Rules for Investing During the Pandemic

Wall Street remains bullish. Industry analysts in aggregate predict the S&P 500 will witness a 6.3% increase in price over the next 12 months, which is optimistic considering myriad headwinds including COVID-19 (see chart, with price predictions broken down by sector).

The Energy (+24.5%) and Financials (+16.8%) sectors are expected to see the largest stock price increases. But these projections are predicated on a robust economic recovery, which doesn’t seem to be on the immediate horizon.

Pick your spots…

Further sell-offs probably lie ahead but you shouldn’t try to time the market. If you wait until the stock market bottom is obviously behind us, you’ll miss out on big gains. Careful stock picking is the answer, which is where the experts at Investing Daily can help. There’s still plenty of money to be made despite current risks, but you must pick your spots.

One investment theme you should pick now is the global roll-out of 5G (“fifth generation”) wireless technology.

Read This Story: Seize This Once-in-a-Lifetime Opportunity

The companies developing and leveraging 5G wireless are huge money-making opportunities. 5G technology will provide faster and higher capacity transmissions to carry the massive amount of data that will be generated by the Internet of Things, smart cities, smart homes, autonomous vehicles, video streaming, virtual/augmented reality, and more.

Consumers will soon crave and then get accustomed to the fast download times made possible by 5G.

Our investment team has pinpointed one small technology company instrumental to 5G. It’s a largely unknown but vitally important innovator and it’s poised to soar in tandem with 5G’s global implementation. Click here for details.

John Persinos is the editorial director of Investing Daily. Questions or comments? You can reach him at: maibag@investingdaily.com