The theme song for the James Bond movie Octopussy was “All time high” by Rita Coolidge. It’s all lovey-dovey James Bond stuff in the song, but the market has had its own share of All Time High’s over the past month!
The Nikkei 225 stock index surpassed its previous all-time high from 29 December 1989! Yes – it took Japan 34 years to reach the peak stock market level! It was the end of the post-war boom and times had never seemed so good. There was excessive speculation in real estate and equities as investors, both retail and corporate, believed that prices would rise indefinitely! When the bubble finally burst, it led to a period of protracted economic stagnation and deflation known as the “Lost Decade”. Economic activity picked up, but asset prices took a lot longer to recover! Interestingly, it is worth watching China, who may not have reached the same lofty peaks that Japan did, but are potentially facing the same headwinds to recovery!
Bitcoin also reached a new all-time high this week, but oh-so-briefly. This emerging asset has people confounded, and there isn’t much to work on in terms of price discovery or fundamental analysis. This week Bitcoin touched its previous high which it reached in December of 2021 and then promptly fell 10%. When I say promptly – I mean within an hour or so! This is not an investment for the faint-hearted! Keep your eye on the news though, with the new ETF’s gaining traction, I am sure we will see a lot more news about the digital currency as it becomes more widely investable.
The S&P500 also closed at an all time high this week, reaching an index level of 5,137.08 on 1 March 2024. It was matched by the Nasdaq that reached its own high of 16,302 on the same day. The level of these indices is somewhat misleading as it has been driven higher by a small number of tech stocks and is not a broad market rally! Starting earlier this year, the magnificent seven have been falling to the wayside a bit, and we now only have a magnificent three that we are counting on! Tesla was the first to fall, then Apple, Google, and Microsoft – none of which are reaching new highs. The darling Nvidia is at the top of the pile, with Meta and Amazon keeping pace.
Gold also hit a new high of $2,141 per troy ounce this week. Investors often buy gold when they fear uncertainty – it has the status of being a “safe haven” asset. Is the amorphous market fearing inflation? It seemed that the Fed had inflation firmly under control at the end of last year and hinted at aggressive interest rate cuts as a result. That commentary has been dialled back significantly, as rate cut hopes have been tempered. Where we expected seven rate cuts at the beginning of this year, we are now only expecting three – sounds like the magnificent seven!
Sadly, global temperatures are also reaching all time highs, with February 2024 being declared the warmest on record globally! The European Union climate agency, Copernicus, reported than the sea surface temperatures weren’t just the hottest for February, but were the hottest ever recorded, soaring past August 2023’s high mark!
All-time highs are exhilarating, but nerve wracking! The S&P500 has had 15 new all-time highs this year. In 2021 it made 70 new all-time highs, and 62 in 2017. So it doesn’t mean we’re at the top because we’re at an all-time high, but after a run of them, it’s worth paying attention to what’s driving them!
All time highs
The theme song for the James Bond movie Octopussy was “All time high” by Rita Coolidge. It’s all lovey-dovey James Bond stuff in the song, but the market has had its own share of All Time High’s over the past month!
The Nikkei 225 stock index surpassed its previous all-time high from 29 December 1989! Yes – it took Japan 34 years to reach the peak stock market level! It was the end of the post-war boom and times had never seemed so good. There was excessive speculation in real estate and equities as investors, both retail and corporate, believed that prices would rise indefinitely! When the bubble finally burst, it led to a period of protracted economic stagnation and deflation known as the “Lost Decade”. Economic activity picked up, but asset prices took a lot longer to recover! Interestingly, it is worth watching China, who may not have reached the same lofty peaks that Japan did, but are potentially facing the same headwinds to recovery!
Bitcoin also reached a new all-time high this week, but oh-so-briefly. This emerging asset has people confounded, and there isn’t much to work on in terms of price discovery or fundamental analysis. This week Bitcoin touched its previous high which it reached in December of 2021 and then promptly fell 10%. When I say promptly – I mean within an hour or so! This is not an investment for the faint-hearted! Keep your eye on the news though, with the new ETF’s gaining traction, I am sure we will see a lot more news about the digital currency as it becomes more widely investable.
The S&P500 also closed at an all time high this week, reaching an index level of 5,137.08 on 1 March 2024. It was matched by the Nasdaq that reached its own high of 16,302 on the same day. The level of these indices is somewhat misleading as it has been driven higher by a small number of tech stocks and is not a broad market rally! Starting earlier this year, the magnificent seven have been falling to the wayside a bit, and we now only have a magnificent three that we are counting on! Tesla was the first to fall, then Apple, Google, and Microsoft – none of which are reaching new highs. The darling Nvidia is at the top of the pile, with Meta and Amazon keeping pace.
Gold also hit a new high of $2,141 per troy ounce this week. Investors often buy gold when they fear uncertainty – it has the status of being a “safe haven” asset. Is the amorphous market fearing inflation? It seemed that the Fed had inflation firmly under control at the end of last year and hinted at aggressive interest rate cuts as a result. That commentary has been dialled back significantly, as rate cut hopes have been tempered. Where we expected seven rate cuts at the beginning of this year, we are now only expecting three – sounds like the magnificent seven!
Sadly, global temperatures are also reaching all time highs, with February 2024 being declared the warmest on record globally! The European Union climate agency, Copernicus, reported than the sea surface temperatures weren’t just the hottest for February, but were the hottest ever recorded, soaring past August 2023’s high mark!
All-time highs are exhilarating, but nerve wracking! The S&P500 has had 15 new all-time highs this year. In 2021 it made 70 new all-time highs, and 62 in 2017. So it doesn’t mean we’re at the top because we’re at an all-time high, but after a run of them, it’s worth paying attention to what’s driving them!
Asset Class Returns
The table below represents a rolling year view of the major asset class returns that we track. It offers a view of the asset classes we use to diversify your portfolio.