Green Like Baby Yoda
If you haven’t subscribed to Disney+ yet what is even happening in your life? It’s like 6 bucks a month for every movie you ever loved as a kid plus a ton that you love as an adult. That’s one less hamburger for crying out loud, get on it! It also has original shows like a brand new Star Wars western called “The Mandalorian.” In it we meet what has to be the most delightful character since Winnie the Pooh: Baby Yoda! Look at this thing, are you joking me, let me buy ALL the toys! This little doughy eyed force user is a wonderful shade of green, green like the money he’s about to dump into Disney bonuses but also green like the stock market in 2019. It’s been awhile since I got down in the muck and told you fine people what’s happening in markets so let’s put on our baby jedi robes, hold out our little hand, and talk stocks!!
The S&P500 hasn’t been down in a pre-election year since WW2 (h/t Ryan Detrick) and barring a “Michael’s grades sophomore year” type collapse, won’t break that streak. As of November 21 (the day before my birthday…so shameless), on a total return basis stocks are up 26.2%. Incredible. But let’s go back to the end of 2018 for a second to make a quick point. The Fed was hiking, a Trade War was in full effect, growth was slowing all over the globe. A 20% selloff (which many people are now calling a bear) was the market telling us that a recession was likely imminent. Luckily for us the Fed jumped into easy mode, the US consumer shrugged it off, and the Trade War got slightly better as the odds of a small deal improved. Remember, stocks discount the FUTURE not the present. Everything inside this box was the market saying “I’m extremely nervous about what’s happening globally” yet we stayed out of the abyss and recently made a new high because things didn’t worsen. We flew close to the ground but didn’t touch it.
Now here's the best part my friends: not only has the S&P500 broken out but so has the World. Take a look at the MSCI ACWI which represents 49 global stock markets (pronounced ACK WHEEE. Maybe the worst name for something since the Tribune company turned into Tronc). What might this index be saying? Well, in my opinion, it’s saying that global growth has likely bottomed and looking into the future it expects things to improve. Could that change on a dime? Of course, markets can always change their mind about the future (esp with this crazy Trade War), but as long as more than just the US trends higher that has to bode well for the new year. In fact, when the S&P is up this much in a year its been positive the next year 71% of the time. Will 2020 be green like Baby Yoda? I sure hope so but there is one thing I am certain of: this little Muppet will be THE hottest toy of the Holiday Season. I gotta get me one!!!!
- Don’t miss my take on the past Decade!
- Or Ben Carlson’s take on the last decade “Shockingly, a vast majority of the gains over the past decade can be explained almost exclusively by improving fundamentals.”
- Everyone keeps talking about the fact that returns over the next decade might be lower because they’ve been so good this decade. Batnick addressed that here: “It’s probable that returns will be lower over the next decade but that doesn’t mean you should stop investing if you can afford to. You may not receive the same level of compensation for each unit of risk, but you spend 100% of the money you don’t save”
- Incredible Disney+ Meme
- After 45.99yrs of life how did I not know this?
- Q: “Mike…I love getting into highly technical economic analysis (said about 5 people ever) what should I be watching right now?” A: I would argue Leading Indicators. I check this link every month and this might be one of my favorite charts.
- Things Michael should’ve invented #85. A swing to enjoy alongside your child? How did I not think of this?
I have a quick final link for you tonight where I guarantee one thing: you’ll gasp
Have a good night