The New York Stock Exchange located at 11 Wall St. has been a on a Bull Run for the last 11 years with an ROI of 400%! It took a pandemic this spring to put the genie back into a bottle. Normally, we see a correction every 7 years but this run has been an outlier. With a drop of 20% in March and the unknown of the COVID, Americans could only hold on and hope 2008 would not repeat. The 116th Congress passed the CARES Act on March 27, to the tune of $2.2 Trillion to battle the shut-down. The $850 Billion bank bailout of 2008 seems like nothing. By June, the losses in IRA’s and brokerage accounts returned, even though unemployment had hit 11%.
The 2nd warmest summer recorded, 2020 (1st 2016), helped heat up stocks but the Tech companies were behind the rebound, while others struggled to regain their share price. The American economy is consumer spending driven (2/3’s of GDP), and with so many out of work I did not understand the growth and wealth creation of Wall St. So I discussed it with my broker and Uncle, who have more knowledge and experience, to balance the equation.
Both men were excited about the drop and that there was an amazing sale, clearance; half-off. They continued to buy as much as they could afford, I felt the opposite. “Good headline, good day in the market, bad headline and a drop,” said my broker. When I questioned the amount of Federal Reserve notes being printed, ($3 trillion, more in 5 months than the decade after 08) there response was, “The Fed will print more money.” When I questioned inflation, “You’re right Steven, we didn’t suffer much last time but I don’t believe this to be much different.”
Understanding that money isn’t really real (Backed by Faith), but perceived in this manner; the flooding of it into the market caused alarm. I felt the bottom had not come and sold 75% of my positions. June, July, August, and September were hard to watch while the markets grinded forward, even though the news of everyday Americans continued to be, “If it bleeds, it leads.” This current market condition is reminiscent of 2000 and I feel a real correction on the horizon with the Election and uncertainty of 2021.
Today, the Dow Jones took a 2.29% drop with the national polls indicting, a Joe Biden lead over President Trump and higher taxes. The political shit storm of RBG’s death, house and Senate races, and the failure of Congress to pass an additional stimulus have left investors uneasy. Black Friday and Christmas should spur a spark, but after the New Year and Inauguration who knows.
In my opinion, unemployment is much higher than the cited metric of 8%. Just as Trump said in 2016, “Everybody that quits looking for a job is considered statistically a person that has a job.” The addition of 611,000 jobs in September doesn’t impress me, when most are unskilled labor, low paying, nonunion, and independent contractors. Real GDP growth comes from an educated, informed, skilled, engaged, prosperous, and conscious public. Investments must be made in the average citizen if we are to maintain a 1st world status, not the de-facto shot callers, Corporations.
That being said, the Crypto Market has seen an upswing with BTC trading over $13,000 for the first time since January 2018. Will Investors divert capital to the Crypto Market and trigger a BTC and ETH run for the New Year? Just under $400 Billion, in total market cap (BTC 60%), the digital currency arena is in an infant stage, (NYSE $22.9 Trillion) and prime for innovation. Will the uncertainty of the Election, COVID, Race Relations, Schools, and jobs bring on a long overdue correction or does the country keep the tab the open?
Comments
Wow, this piece of writing is pleasant, my younger sister is analyzing these things, thus I am going to tell her. Trix Arnold Ursas
Author
Thanks for the kind words
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