The current myth claims that “a handful of stocks pushed the S&P 500 to new highs.” Perhaps AI hype is driving up his 2000s bubble-like tech stock “Magnificent 7” stocks. mistaken. This was just clutching at straws, and few people predicted a bull market. No, this bull market is a grand celebration of the return to normalcy. The fact that we only know a little means that we still have a long way to go. Let me show you.
Indeed, “The Magnificent 7” became a big hit. That’s true. Alphabet (Google’s parent company), Amazon, Apple, Meta (Facebook’s parent company), Microsoft, Nvidia, and Tesla raced like secretariat from the bottom of the 2022 bear market. And everything other than Tesla is like technology or technology that is exposed to AI.
But every bull market has leaders and laggards. Typically, the categories of stocks that decline the most during a bear market rebound the most early in the next bull market. guess what? Tech and tech-related stocks led the decline in 2022. Although not limited to the Magnificent 7, the significant recovery in technology since then is not surprising.
But it’s not just about technology. How do we know that? Let’s take a look at what technology isn’t Magnificent 7 is based in the US and is part of America’s huge region that accounts for 30% of its weight in technology globally. But in technology-poor overseas markets, industrial, financial, and even utilities are soaring, but technology is almost non-existent. In local currencies to avoid skew, markets with record total returns this year include Australia’s ASX 200, UK’s FTSE 100, MSCI Denmark, France’s CAC 40, Germany’s DAX, MSCI India, ISEQ in Ireland, MIB in Italy, TOPIX in Japan, AEX in the Netherlands, IBEX in Spain. all! I repeat, everyone! Only Magnificent 7? Understood? Although it varies in size, this magnificent market, while not ubiquitous, is very global and much wider than is fancied.
Or just think about it. In 2023, nearly 75% of his 1,400+ stocks in MSCI World rose. A full 548 beat the world’s 23.8% return. How the wise pundit transforms it into myths like his 7-stock bubble is the main lesson in “The Pessimism of Disbelief.”
Sir John Templeton famously said, “Bull markets are born with pessimism, grow with skepticism, mature with optimism, and die with euphoria.” Naysayers believe that we have rapidly reversed from pessimism to euphoria. That’s what he seems to be thinking. Remember the bubble of the 2000s? Or will 2021 be a little bubbly too? The market in the late 1990s was flooded with his IPOs. 2021 is littered with countless SPAC services. This is natural. Euphoria means the founder or owner of a company wants to gorge himself on his IPO’s dessert buffet. Where are IPOs now? Nowhere. (IPO, as I coined the term decades ago, actually means “probably priced too high.”)
We are far from euphoric, and all these “Magnificent Seven” allegations prove that. Skeptical, doubtful talk of “it’s just” never thrives in a bubble. In 2000, this was not the case. It takes a long, long time for pessimism to turn into happiness. We may now be caught between skepticism and optimism.
We have a huge misunderstanding of normal economic growth and inflation rates before the pandemic. Before the lockdown collapse in 2020, the US was growing from 1.7% to 2.9% annually. world? Approximately 3%. And in 2020, all economic indicators were thrown into turmoil due to the effects of the coronavirus, and although they initially collapsed, they have since rebounded significantly. According to IMF data, the U.S. and global growth rates in 2021 are a staggering 5.9% and 6.3%, respectively. It then returned to the historically normal 2.1% and 3.5% in 2022, and the final estimate for 2023 is in the midst of pre-pandemic norms. It’s just a super-fast return to his old routine from 2021.
Perhaps past growth rates seem scary. But the old normal of driving healthy sales and profits despite constant complaints that the economy isn’t good enough has been great for the stock market. This was enough to create the longest bull market in history from 2009 to 2020. And it’s easily enough for this great bull market to operate right now.
Ken Fisher is the founder and executive chairman of Fisher Investments, a New York Times bestselling author, and a regular columnist in 21 countries around the world.
