• Christian Armbruester

The Great Equity Bull

The stock market rally since March 2009 is now on the longest winning streak in living memory. Can it continue? Clearly, we don’t know and as passive investors we are also not trying to time the markets. But we do know that markets are forward looking, and that the price reflects all future expectations. And so, the question is not can the rally continue, but what is the market telling us, given current prices:

1. Debt doesn’t matter – Debt levels for both governments and private consumers are now higher than before the greatest debt crisis of all times in 2008, and interest rates are rising.

2. There is no geopolitical risk – Trump, North Korea, wars in the Middle East or Brexit pose no threat of further damage or contagion.

3. The planet is doing great – Ignore the mountains of plastic, the melting of the ice bergs, the increasing frequency of natural disasters and trust that all the industrial growth will have no effect on the water we drink, the air we breathe, and the earth which feeds us.

4. The 99% don’t matter – In the age of billionaires, and soon to be trillionaires, most of the planet has less than ever before and there are more than 1 billion people starving in the world. None of which will cause any social unrest or major political changes.

Given the rather large risk of any of these implied projections not coming to pass, it is difficult to fathom why people would be rushing in to buy at these levels. Unless of course, we all believe that technology will solve all problems. On top of finding ever more ingenious ways to send ourselves more messages, pictures or videos to stream, we actually invent something that will save mankind. Here’s to that and long may it continue.


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