thependulumswings

Friends

With the S&P 500 getting very close to the 4000 level, I saw a note today that remembered that the first time the S&P closed above 400 was in December of 1991. That’s a 10 bagger as we say in the biz, over a 30 year period. It’s another great illustration as to how wealth is created in the stock market. If an investor simply would have bought “the market” 30 years ago, she would be up 10 fold today. That is how wealth is created. Not jumping in and out and buying Gamestop after it’s gone up 1000%. Ok, I sound like the “get off my lawn” guy now, don’t I?

Let’s briefly review the last 30 years. We’ve had 2 evil Democrat Presidents (Clinton and Obama if you’re a Republican) and 2 evil Republican Presidents (Bush and Trump if you’re a Democrat). Of course, now we have a 3^rd evil Democrat President in Mr. Biden. In the late 90’s we saw the collapse of Long Term Capital Management and the Asian currency crisis in subsequent years. Then in early 2000 we saw the bursting of the dot-com bubble and Nasdaq drop 80%, followed by the horrific 9/11 attacks. Of course we saw fraud rear its ugly head with the collapse of Enron, Stanford Financial and of course good ole Bernie Madoff.  Just about when we had recovered from that we saw the housing crisis and the near collapse of the developed world financial system. In recent years we’ve seen budget battles, Brexits, Flash Crashes and heightened trading volatility fueled by easy money, technology and leverage. But, when all is said and done, the S&P 500 is up 10 fold. $50,000 invested in the S&P 500 30 years ago would now be worth approximately $500,000. Your honor, I rest my case.

As for today’s action, by the close the Dow Jones Industrial Average was down 85 points to finish the day at 32,981. The S&P 500 was up 14 points to close at 3,972. The Nasdaq Composite Index was up 201 points to close at 13,246. Gold was up $23 to trade at $1,709 per ounce, while oil was down $1.35 to trade at $59.20 per barrel WTI.

The bulls were able to deliver another good quarter for stocks. Not all stocks were created equal though this quarter. Value soared while growth lingered. Nevertheless we enter the second quarter of 2021 with the bulls holding the high ground.

Have a nice evening everyone.

Jim