TORONTO -- What a week it has been with COVID-19 cases continuing to march stubbornly higher right around the globe, economic data challenging at best and the disbelief we all felt witnessing pro-Trump rioters storming the U.S. Capitol building.

Yet through it all investors remain optimistic and the markets continue to not only march higher but in many cases hit record territory with broad-based advances.

Proof, once again, that there can be a disconnect between market performance and economic performance.

As the first trading week on 2021 draws to a close there is plenty to worry about yet at the same time the focus for investors has clearly shifted a glass half full mentality. The overriding theme has been one of rising stock markets around the globe.

Investors are now clearly focused on economic growth and not contraction. Stimulus packages in the U.S. given a Biden administration will likely take on a much larger scale than was even anticipated just a few weeks ago. This is due to the U.S. Democrats winning the Georgia runoffs this week to gain control of the Senate. Back in December lawmakers compromised and pushed the US$900-billion relief package, however, Nancy Pelosi, of the democrats, strongly endorsed a package worth closer to $2 trillion. Sentiment is growing that U.S. President-elect Joe Biden will push for more support when he takes over the top job later this month.

Investors look for clues when a new leader and new policies take hold.

Back to the markets. The S&P/TSX surpassed a high previously recorded back in February before the pandemic crushed market sentiment yesterday. Those lows in the rear view mirror and a mantra: that was then and this is now.

Investors have bought into the concept a vaccine will take hold and economies will open back up and have been flocking to value-oriented and cyclical sectors in Canada. Commodities have been hitting recent highs such as copper, platinum, palladium and even oil trading over $50.00 U.S. a barrel all in anticipation of infrastructure building taking hold and China being hungry for commodities. Joining the hype pot stocks which are up 13% this week alone on the back of an expectation a Democratic-led Senate will be a win for the sector.

The markets are thought to be forwarding-looking entities with investors betting on the next big thing to grab hold. Along the way taking the markets to new highs while yet again for now disregarding the reality of today.

Stimulus, pent up demand and infrastructure spending, to name a few, put the spotlight on the disconnect between investor anticipation and current reality.

However, a final thought, no trajectory is straight up and the wildcard of 2020 -- the pandemic -- continues to be the wildcard of 2021. We need to get this pandemic under control or all bets are off. Money is sensitive, mobile and scarce and the markets move quickly so proceed with caution.

If there has been a lesson learned this past year - we all need some downside protection in our portfolio for the "what if" scenario.