Boom with a View

So history never repeats, but it does rhyme they say.

Are we currently in a boom, or is the steady growth of the stock market just that .. steady growth?  When is a long period of steady growth a boom?  And the thing about booms is.. we always expect them to end in a bust, so it may well pay to get to the bottom of if we are in a boom heading crazily along a mountain path, or in a cruisy RV swinging down Route66 listening to the Grateful Dead and just takin it easy?

The last boom in 2000 was the ‘tech’ boom.. i.e. the rapid growth in quite a small area of investment.  Just prior to the GFC, it was housing’s turn to be the lightning rod.

This time it feels a little different.. and perhaps a little more dangerous.  When you look at the trajectory of the S&P over the last 12 months, the pace of growth has been accelerating… and was looking unclimbable until the recent reset in January (2018).

This time one perspective could be that instead of a small subset of assets acting as funnel for investment and speculation, it seems the entire market is taking the heat.  Now this could be a good or a bad thing.  Good because the valuations being placed on the market, and all sectors of the market, seem reasonable and based on numbers you can justify MBA style without resorting to blue sky.. i.e. decent earnings are being posted by the Fortune 500, and with synchronised global growth humming along at around 4%, one has a reasonable foundation to assume in the short to medium term at least, that growth in earnings (and share price value) has some support.

 

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