March 2024 Newsletter

Stock Markets ?

     The Japanese stock market has just now made a comeback from its 1989 high. After reaching a high at the end of 1989 Japanese stocks went on an 80% decline. 34 years and just now getting back to break even. Even if you included dividends Japanese stocks still took until 2021 to get back to break even. Sounds like a reason to be miserable, not celebrate, for Japanese stock investors through all of this. The same thing happened here during the great depression. It took right at 25 years for major stock indexes to recover after 1929’s meltdown.

At the end of the 1980’s Stock Market prognosticators were all abuzz with predictions of how Japanese superior corporate structure and culture gave them a big advantage. It was said they would use this to take over many industries. Give them some credit, they basically did that with automobiles. The only reason Ford, Chevy, or Chrysler ever built better cars is because the Japanese forced their hands. Without government bailouts and forced mergers, only Ford would still be here.

 

  How did we grow ?

     The biggest reason for the huge discrepancy between our 2 markets over the last 30 something years has many facets. Politics, population, culture, governance/bureaucracy, location. My biggest takeaway as to why our Markets diverged is the miracle of technology. We in the Good Ole USA somehow got out of the way and let people gamble and invest huge sums of money into technology that has truly changed our lives. We let and encouraged corporations to take advantage of these new tools to be many times more efficient. Not just huge corporations, much bigger are the many millions of small offices / businesses that were enabled by technology. In fact, without technology most of these small businesses would have never happened.

IBM who was the gold standard and they got beat out for much of their business by many upstarts. Microsoft-Apple-Dell-Adobe-Intel-HP, just to name a few that are still around today. Following that, the internet boom of the late 1990’s was nothing short of miraculous.  Yahoo-E Bay- Amazon-Google– Cisco we were dotcom crazy. This all blew up in 2000 and many companies died. Webvan-Pets.com- WorldCom– Global Crossings were a few of many that did not make it. We cannot mention all of this without reminding ourselves of maybe the worst merger of all time: Time Warner and AOL.

Somehow we made it ?

     All this destruction of capital took its toll and markets struggled for many years in the early 2000’s. We who lived through it know what a cyclical bear market is like. Real Estate hype, cheap money, and bad governance fueled the 2008 bust. Do you still remember the March 2009 investment statements? Not a good memory.

Out of those ashes we reinvented and keep innovating and growing. 15 years after the 2000 debacle the NASDAQ got back to its all-time high. It is not all bad news: dividends really do make a difference and stock market levels do not reflect all the results. Over the last 50 years $100 invested in U.S. stocks got to $6,200 in value, while reinvesting dividends $25,000 in value.

Get out of the way ?

     Predicting all this technological change over the years and the timing of all this is impossible. If we can stay out of the way, A.I. is going to be a monumental change in technology. It can also be a huge wealth generator, as such, profits and markets could benefit. Hopefully for the good of all mankind.

 

Thanks, Andy McClung CFP®

Wall Street Journal James Mackintosh/ NASDAQ.com

 

2024 Market Results

S&P 500                    +7.7%

NASDAQ Composite   +8.4%

Dow Industrials             +3.7

Russell 2000                 +2.4%

World ACWI                +5.5%

Source Wall Street Journal 03/04/24

  

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