The best long-term investment returns are generated when an unloved (almost hated) asset or sector comes out of a decade long bear-market.
US stocks in '82 or '13
Commodities in '00
EMs in '03
The dogs of the past decade likely to do well over the next 10-15 years.
US stocks in '82 or '13
Commodities in '00
EMs in '03
The dogs of the past decade likely to do well over the next 10-15 years.
By the time a story is fully understood, its usually too late.
Investors loved US stocks in the late 60s, they loved commodities in the late 70s, they loved Japan in the late 80s, they loved TMT in the late 90s and they loved commodities/EMs in late 00s.
How did that turn out?
Investors loved US stocks in the late 60s, they loved commodities in the late 70s, they loved Japan in the late 80s, they loved TMT in the late 90s and they loved commodities/EMs in late 00s.
How did that turn out?
A number of the shiny/growth stocks have tripled or even quadrupled since March!
The question to ask is "have their operating results tripled or quadrupled over that period"?
NO, they haven't. These stocks have rallied due to COVID fear and multi-expansion. Worth remembering.
The question to ask is "have their operating results tripled or quadrupled over that period"?
NO, they haven't. These stocks have rallied due to COVID fear and multi-expansion. Worth remembering.
US stocks have been in a secular bull-market since 2013 (when $SPX broke out of its 12-year range) and given the Fed's policies, we'll probably witness a speculative blow-off over the next year or two.
However, very likely that'll be followed by years of disappointing returns.
However, very likely that'll be followed by years of disappointing returns.
Nasdaq 100 / Emerging markets ratio chart -
Ratio now at 1999 level, only TMT bubble blow-off in early '00 was higher. Then, the party ended and everything turned into pumpkin and mice.
History is sending a clear message.
$NDX $EEM
Ratio now at 1999 level, only TMT bubble blow-off in early '00 was higher. Then, the party ended and everything turned into pumpkin and mice.
History is sending a clear message.
$NDX $EEM
Finally, here is the software / emerging markets ratio chart -
Ratio at *late* 1999 level now, only TMT bubble blow-off in early '00 was higher. Then, $EEM outperformed software stocks for a decade.
Ratio at *late* 1999 level now, only TMT bubble blow-off in early '00 was higher. Then, $EEM outperformed software stocks for a decade.
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