This slow and steady upward market is slaying naysayers and long-term bears on a daily basis. March and April had impressive gains so one would expect a breather in the rally, but the long-term forces of this bull market probably will not let everyone catch their breath. Here are two difficult questions to contemplate – Does the market go up because of societal optimism or Does the market create societal optimism by going up? It is probably a little of both. Market cycles are a product of the human experience, meaning that they exemplify how we feel about our future. Humans have mood swings. It is no coincidence that the darkest period in our market’s history was called “The Great Depression.” 2020’s decline in the indexes was steeper than the decline in the Great Depression but it did not last nearly as long. In a free enterprise economy, technology thrives on disruption which becomes the mother of all kinds of new inventions that create new industries and improve the way old industries work.
As portfolio managers, we are surprised at how long the leading sectors in the present market have held on to their lead. We believe this is a sign that this bull market is going to be so long in duration that industry cycles may be “stretched” longer than what would otherwise be the norm. We anticipate the market to resume strong, steady growth after what may be a small breather here (a.k.a market drop) and we look to this year to be one of the best performing ones we have ever seen.
Gary and Dianne
This report is provided as a general market overview and should not be considered investment or tax advice or predictive of any future market performance.
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