There is a narrowness to the US stock market’s “strength” so far in 2023 that warrants attention. Out of the five hundred US companies in the S&P 500 index, if not for seven of them (or eight, if Netflix is included) the index would be down for the year.
These seven or eight companies are all mega-capitalization technology companies: Nvidia (whose chips are currently fueling white-hot artificial intelligence), Apple, Microsoft, Amazon, Meta (formerly Facebook), Alphabet (parent of Google), Tesla, and the 8th is Netflix (arguably as large and hot as the rest).
It may be time to diversify – if that was not already the name of your game.
When is the last time that BONDS, no less the 10-year Treasury and TIPS, were the information we sought to read before we checked TSLA and AAPL??
Yes, when stock markets get rocky it is wise to look to the bond market, interest rates and the Fed for answers. Here is a less than 2-minute primer on several terms that matter. Oh, and my bond expert and bond trader friends will smile at the following statement: Everyone knows the “bond gals and guys” are smarter than the “equity gals and guys.” (PS. I started out as an equity gal.)
When stock markets get rocky it is wise to look to the bond market, interest rates and the Fed for answers.
By now, most investors know that in late February of this year through mid-March the stock markets kind of crashed. It was a matter of 31 days from February 20th to March 23rd….not that I had to look that up or anything.
It was swift and ugly. And then, the stock markets both suddenly and slowly recovered, hitting it big in April and then gradually reaching new all-time records by September. Hmmmm… how does that work? Is it “free markets”? More buyers than sellers? Individuals throwing money at stocks?
SoftBank reported $4 billion of options trades representing $50 billion of underlying value in the same handful of technology stocks in the US.
“10th Anniversary of what?” you may ask. Well, it appears you are not the only one in a state of ignorant bliss – no offense intended! I thought it may have been a bigger deal in the news, but very little has been written or reported about this 10-year milestone.
Photo by PhotoMIX Ltd. on Pexels.com
Newsflash: Things are (mostly) GOOD in the economy, businesses and peoples’ financial lives in the US these days. Don’t take my word for it. Just this week The Wall Street Journal ran an article leading with: “The job market doesn’t get much better than this.”* The title of the article was, “Inside the Hottest Job Market in Half a Century.” Wages on average in the US are rising modestly after “long-term stagnation” (their words not mine), and unemployment is the lowest in 50 years – with women experiencing some of the greatest gains in workforce participation.
BUT – it was 10 years ago this weekend on March 9, 2009 that the US stock market hit its low, with the S&P 500 index ominously touching 666, only to settle around 2750 this week. Ten years ago, the US (and global) economy was in “The Great Recession” and it was ugly. But then, yes, the S&P 500 took its time and has risen in value over four (4) times in roughly 10 years. There have been a few bumps – amidst higher interest rates – but stocks in the US and globally are materially higher which has created and grown wealth along the way. Continue reading “Happy 10th Anniversary?”
