American Consequences - October 2018

You see, back then the entire market had soared through the ‘90s. The old fuddy-duddy companies made huge gains right alongside the exciting new Internet stocks. But that changed as the bull market neared its end and the Melt Up took over. Just take a look at the top chart to the left. It shows the last 12 months of the 1990s bull market. And you can see that the fuddy- duddy companies (the Dow Jones Industrial Average) stopped keeping up with the exciting tech companies (the Nasdaq). Take a look at the top chart to the left... The Dow basically went nowhere for the final 12 months of this stock market Melt Up, while tech stocks soared more than 100%. The beginning of that major outperformance is what signaled the Melt Up getting fully underway. And now, that’s happening again. Until recently, boring stocks and exciting tech stocks had soared together. The tide of recent years has lifted all ships. You can see it in the middle chart to the left... From late 2016 to early 2018, the old fuddy- duddy stocks have tracked nearly perfectly with the exciting tech sector. Heck, these boring businesses even outperformed for a good chunk of that time. But you might notice that the chart above ends in April. That’s because things have changed in recent months. We’ve seen a major shift in performance. The exciting tech stocks are finally crushing the boring fuddy-duddy businesses. Take a look at the bottom chart to the left...

26 October 2018 ct r

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