Transcript
Hello, everybody, welcome to Monday, the S&P 500 was up .9%. Today, the stimulus package got signed, that’s a big deal to the market, throw that on top of all the other things that are going along to kind of help this market continue to grow. And it really, I think, is a big piece of the puzzle altogether. So very happy to see that signed. I do want to talk a little bit about today’s leadership, I thought it was interesting.
On Thursday, and today, the last two market days, it has been the big tech stocks, the Apple, the Microsoft, the Facebook, the Amazons, the Googles, that have shown a lot of leadership and outperform the market. One of the things that was happening before back in April through really July, August, we saw that same group do quite well. But they’ve really slowed down September, October, November, we’re not great months for these big tech stocks. So it’s interesting to see them running right now. I don’t know if it’s the beginning of a trend or something we’ll watch for, the only thing I would be cautious about is that the volume has been quite low. I mean, Thursday was a half a day, and today the volume was pretty low to a lot of people probably on vacations. So we’ll just watch that and see how that plays out and see if that trend is something you know, that we need to look at.
Again, we still have exposure to that. But we have lightened up our exposure to those just because they’ve kind of, you know, slowed down so much. Right end of the year, lots of articles coming out about what people think are going to happen next year, some of those are about the market. And quite a few of them keep talking about how 2021 could be like 2000. And in 2008, when the market got very overpriced and fell apart. Alright. So you know, here we are markets been running, it’s very strong. And so this must be like 2000. But there’s some key pieces that are really missing, in my opinion, that that aren’t there.
So let me let me just share with you a couple of things real quickly on how I might look at this. This is the S&P 500 for the last 25 years, you know, here’s our 2000 downturn 2008. Here’s the, you know, pandemic downturn at the beginning of this year. And so these are, you know, still very good market and lots of upward trend there. But, you know, they’re saying we’re right here, let me make one counterpoint that I think’s kind of interesting. This is from a website I really like called Macro Trends. This is the Fed Funds Rate. Okay, so this is the rate that essentially sets other interest rates. And it’s controlled, more or less by the Fed. And you can see here what they did a back starting and kind of ’93, we started raising rates, and we had fairly high rates for it. And this is the last 25 years worth of data here. And the market fell, and so they lowered rates. And then they did straight up rate increases, I think they did 21 in a row here.
Prior to the 2008 downturn, again, they were trying to squash the housing bubble, which they did, which squashed every other bubble at the same time. But we ended up with this big downturn, and then very low rates. And during this low rate period, here, we did not have any really big crashes, I started raising rates again. And then lo and behold, you know, here we are starting to come back down very aggressively after do the pandemic hit.
So my key point here would be unlike 2000, unlike 2008, they were not raising interest rates dramatically, you know, going into those downturns, we’ve had interest rates that have been lowered that are continued to be low, we have the Federal Reserve saying they’re going to keep it low. This would be a first to have a big monstrous market crash 40, 50, 60% with interest rates at near zero. So it is possible anything’s possible. But that low interest rate keeps draining money out, throw a stimulus on top of that, throw a vaccine that seems to be working on top of that, get all this cash that’s been saved in 2020. That might some of it might come out in 2021.
I think things are lining up, you know, more so for the positive side than the negative. I think it’s important to look at both. It’s important to understand both. But I don’t know that, you know, we’re going to see so many big downturns in environment with really low interest rates. That hasn’t been true over the last 25 years anyway. So anyway, let’s see what happens tomorrow. Looking forward to see how this all plays out. And I will talk to you then. Thank you