MOMENTS IN THE MARKETS - 9/26/2018
by Mike Wasylyshyn on Sep 27, 2018
It seems we have a really interesting case of subjective reality going on with the public. In August of this year, a survey of 2000 American adults (1602 over the age of 18) was conducted by a major online investment firm. The survey results revealed that 48% of those surveyed thought that the stock market has remained flat over the last ten years. In addition, another 18% of those surveyed thought that the stock market had actually declined over the last ten years. So, just to be clear, 66% of the people in this survey are under the assumption that the market has actually declined or done nothing since March of 2009.
The reality is that the current bull market as of last Friday (09/21/18) is now officially 9.5 years old. It (S & P 500) has gained in the aggregate a total of +429% since the market bottom of March 09, 2009. It is important to note that along the way we have had a number of dips, about 11 or so, of at least 5% but not more than 20%. What a contrast between reality and perception. I am compelled to ask the question, where have these folks been for that last 10 years?
The Federal Reserve Bank is largely expected to raise rates this afternoon by 25 basis points, marking the eighth interest rate hike by the central bank since 2015. Investors will be focusing on any clues the Fed might give us about future changes in monetary policy, especially a possible year-end hike in December. The Fed has raised interest rates twice this year already, so we will be at three hikes so far this year. We expect additional rate hikes in 2019, but we probably shouldn’t obsess over them, although the media will probably continue to do that for us. Instead of just fixating on rising rates, why not also focus on the excellent corporate profits we are seeing, which indicate continued upward market movement to come, in the late stage of this business cycle.
Things That Make You Go Hmmm…
I tend to look back and marvel at how much the world has changed, just in the last ten years or so. Looking back to 2008/2009, the 6 largest companies in the world were: PetroChina, Exxon Mobil, General Electric, China Mobile, Industrial & Commercial Bank of China and Microsoft. Today, the six largest are: Apple, Alphabet (Google), Microsoft, Amazon, Facebook and Tencent.
Back in 2008/09, 185,000,000 smartphones were shipped to users. Today, 1,460,000,000 smartphones have shipped.
Back then, 24% of the world was online. Today, 49% of the world is using the internet. One thing that really jumps out here is the growing importance of technology in the world and society. Tech will continue to be a source of both disruption and opportunity to investors…