Down goes the Dow

Six out of eight indexes on our world watch list posted gains through August 2, 2021. The top performer is France's CAC 40 with a gain of 20.26%, our own S&P 500 is in second is with a gain of 16.80%, and India's BSE SENSEX is in third with a gain of 10.89%. Coming in last is Hong Kong's Hang Seng with a loss of 3.66%.

https://www.advisorperspectives.com/dshort/updates/2021/08/02/world-markets-update-august-2-2021?utm_source=boomtrain&utm_medium=email&utm_campaign&utm_content&utm_term&bt_ee=u1f9VW4gc9wL%2BlTm4E4CfmbxonbeZ58aMvdbBRpWQmzwVGoEM%2FGKBNTAHJPqO8S1&bt_ts=1627995096688

It was looking for a while like I might lose to the Dow for just the second time since 1989. That could still happen, but I have taken over the lead so far in 2021.

Dow - up 14.56% YTD

Flagpole - up EXACTLY 16% YTD

I hope you are all doing even BETTER!

Seven out of eight indexes on our world watch list posted gains through August 9, 2021. The top performer is France's CAC 40 with a gain of 22.73%, our own S&P 500 is in second is with a gain of 18.00%%, and India's BSE SENSEX is in third with a gain of 13.93%. Coming in last is Hong Kong's Hang Seng with a loss of 3.48%.

https://www.advisorperspectives.com/dshort/updates/2021/08/09/world-markets-update-august-9-2021?utm_source=boomtrain&utm_medium=email&utm_campaign&utm_content&utm_term&bt_ee=WPba72hFa4EH8wKt3wnkDSeFnIY0Da0uGUn%2BO5nLcrfc8eXnJ545fNVDkkpKmwvE&bt_ts=1628599893867

“Speculators often prosper through ignorance; it is a cliché that in a roaring bull market, knowledge is superfluous and experience a handicap. But the typical experience of the speculator is one of temporary profit and ultimate loss. Optimism and confidence have always accompanied bull markets; they have grown as the bull market advanced, and they had to grow, otherwise the bull markets could not have continued to their dizzy levels – and they have been replaced by distrust and pessimism when the bull markets of the past have collapsed. All my experience goes to show that most investment advisers take their opinions and measures of stock values from stock prices. In the stock market, value standards don’t determine prices; prices determine value standards.

The more it changes, the more it’s the same thing. The economic world has changed radically and will change even more. Most people think now that the essential nature of the stock market has been undergoing a corresponding change. Would that fact assure the investor against a costly and discouraging bear market experience? It seems to me that this is most improbable. The central level of values will be raised, but the fluctuations around these levels may well be just as wide as in the past, in fact, one might expect even wider fluctuations – the stock market will continue to be a place where a big bull market is inevitably followed by a big bear market. In other words, a place where today’s free lunches are paid for doubly tomorrow.”

– Benjamin Graham, Excerpted remarks, December 17, 1959

An 11 year bull market in which the indices, in most cases, have doubled, and doubled again, is a hard market to sit out in expectation of a bear market. Just sayin'. I don't know, but if it was me, i would keep looking for some quoteworthy investment advice.

How eerily similar to today…..

“Investors accept in theory the premise that the stock market may have its recessions in the future. But these drops are envisaged in terms of the experience of the past ten years when the maximum decline was only 19 percent. The public is confident that such setbacks will be made up speedily, and hence that a small amount of patience and courage will bring great rewards in the form of a much higher price level soon thereafter.

Investors may think they are basing this view of the future on past experience, but in this they are surely mistaken. The experience of the 1949-1959 market – or of all bull markets put together – reflects only the sunny side of the investment. It is one thing to say airily that the market has always come back after declines and made new heights; it is another to reflect on the fact that it took 25 years for the market to reach again the high level of 1929, or that the Dow Jones Average sold at the same high point in 1919 as it did in 1942 – 23 years later.”

– Benjamin Graham, Excerpted remarks, December 17, 1959

That advice has been the kiss of death.,

If you want to base your strategies on what happened on the greatest depression the modern world has ever known, so be it. I can live with a bit more risk than guarding against that possibility,.

And yes, I would fit this bill and returns of the last several decades would indicate that it is a fairly good strategy - " The public is confident that such setbacks will be made up speedily, and hence that a small amount of patience and courage will bring great rewards in the form of a much higher price level soon thereafter."

Ignore the troll.

Bitcoin

“The 1929 boom was, in fact, quite a narrow and selective one. It was a boom of the handful of stocks that figured in the daily calculation of the Dow Jones and New York Times indices, and that was why those well-publicized indexes were at record highs. It was also a boom of the most actively traded stocks bearing the names of the most celebrated companies, the stocks mentioned daily by the newspapers and millions of times by the board room habitués – and that was why it was constantly talked about. But it was emphatically not a boom of secondary stocks in which perhaps as many investors were interested.”

– John Brooks, Once in Golconda, 1969

Hmmm, sounds familiar…..

Ghost of Igloi wrote:

Hmmm, sounds familiar…..

Not really. The expansion over the last decade+ has been broad and wide ranging.

TD Fred wrote:

Ghost of Igloi wrote:

Hmmm, sounds familiar…..

Not really. The expansion over the last decade+ has been broad and wide ranging.

And the fall to follow?

Ghost of Igloi wrote:

“The 1929 boom was, in fact, quite a narrow and selective one. It was a boom of the handful of stocks that figured in the daily calculation of the Dow Jones and New York Times indices, and that was why those well-publicized indexes were at record highs. It was also a boom of the most actively traded stocks bearing the names of the most celebrated companies, the stocks mentioned daily by the newspapers and millions of times by the board room habitués – and that was why it was constantly talked about. But it was emphatically not a boom of secondary stocks in which perhaps as many investors were interested.”

– John Brooks, Once in Golconda, 1969

Hmmm, sounds familiar…..

you sure that is familiar, Iggy? It sounds like 1999 but not 2021 so much.

indices at or near all time highs:

Sp500

nasdaq

value indices

small caps

mid caps

tech indices

consumer discretionary indices

It's been a broad and vast rally over the last couple of years.

Five companies are 12% of the All Country World Index, dominate four of the indices you cited, and rule over the market cap of the ETF universe. Guess which five? 🤡

agip,

True the rally has broadened since the low of 2020. That is true of a host of assets including bonds and residential real estate. I see that as belief that the Fed policies and Government handouts negate valuation concerns. Of course I believe that is magical thinking.

Igy

Ghost of Igloi wrote:

agip wrote:

you sure that is familiar, Iggy? It sounds like 1999 but not 2021 so much.

indices at or near all time highs:

Sp500

nasdaq

value indices

small caps

mid caps

tech indices

consumer discretionary indices

It's been a broad and vast rally over the last couple of years.

Five companies are 12% of the All Country World Index, dominate four of the indices you cited, and rule over the market cap of the ETF universe. Guess which five? 🤡

maybe or maybe not

but over year to date and trailing 12 months the equally weighted SP500 is doing much better than the market cap weighted SP500. So that means the market is not currently being led by the giants.

year to date total return:

RSP equal weighted SP500: +23%

Regular SP500: +19%

Stocks only go up

agip wrote:

Ghost of Igloi wrote:

Five companies are 12% of the All Country World Index, dominate four of the indices you cited, and rule over the market cap of the ETF universe. Guess which five? 🤡

maybe or maybe not

but over year to date and trailing 12 months the equally weighted SP500 is doing much better than the market cap weighted SP500. So that means the market is not currently being led by the giants.

year to date total return:

RSP equal weighted SP500: +23%

Regular SP500: +19%

Wow, i wouldn't have guessed that.

I would guess that last year (2020) and probably the last ten years even, the reverse has been true. This year has been a bit more or backfilling of the underperformers and the broader market.

agip wrote:

Ghost of Igloi wrote:

Five companies are 12% of the All Country World Index, dominate four of the indices you cited, and rule over the market cap of the ETF universe. Guess which five? 🤡

maybe or maybe not

but over year to date and trailing 12 months the equally weighted SP500 is doing much better than the market cap weighted SP500. So that means the market is not currently being led by the giants.

year to date total return:

RSP equal weighted SP500: +23%

Regular SP500: +19%

Oh, the reopening trade. 😷

Back to my point, the aforementioned five stocks represent 22.11% weighting in the S&P 500. That is very much like the Tech Bubble. It is pretty clear your broad based rally lives and will die on the basis of cheap funding via the Fed, and/or government handouts from the Biden Administration.