“Enterprising investor”.
Dow 36,000, crypto, Brexit, GameStop, pandemic.
Imagine saying these terms back in the autumn of 2011 when it was first published. What would they’ve evoked in you and your audience?
Now let’s fast forward ten years and compare what they meant then to what they mean to us now.
It’s a unique world, is not it?
Ten years ago the Dow Jones index was still at 11,000 points. Four years after the worst financial crisis in generations, it had not yet returned to its pre-crisis peak. The bullish forecast by James K. Glassman and Kevin A. Hassett from 1999 sounded just as far-fetched back then because it did in the beginning of the tech bubble when it burst.
Inflation, alternatively, was hardly a cause for concern, especially given the zero rates of interest. Despite the large monetary stimulus, deflation was in some ways the larger concern.
And what about crypto? Bitcoin aside, the crypto market has been a blank canvas, still more the realm of science fiction than actual investment products. If you had predicted that Bitcoin would reach a market cap of $1 trillion, or greater than $65,000 apiece, you will surely have raised a number of eyebrows. The same could be true in case you had suggested that Bitcoin mining would at some point cover the energy consumption of entire countries.
And you may rightly bet that the portmanteau “Brexit” would have elicited a number of “Huh?” in addition to. No one had much reason to doubt that the United Kingdom would proceed to be a member of the European Union. Certainly no referendum was planned, and even when there had been, few would have given it much likelihood of adjusting the establishment. Eurosceptics could possibly be found across the UK political spectrum, but whether Tory or Labour, they tended to stay, if not on the fringes, then no less than on the fringes. In the midst of the European sovereign debt crisis, a Grexit, i.e. Greece leaving the EU, gave the impression to be a way more likely scenario on the time.
GameStop was then what it’s today: a mall that sells video games. “Retail apocalypse” wasn’t yet widely known, but amid the sputtering recovery from the Great Recession, GameStop hardly looked like a growth stock. At the time, nothing on the chart suggested it will warrant a $15 billion market cap, and no analyst could have predicted that it will change into the fundamental-intangible poster child of the meme stock phenomenon.
And as for the “pandemic,” COVID-19 definitely wasn’t on anyone’s radar on the time. And although previous outbreaks of SARS and H1N1 had caused global concern and highlighted the underlying threat, their magnitude was fortunately small and their impact limited. Few living people had experience of such an enormous global outbreak that will close borders, lock down the planet and claim so many lives.
And yet here we’re today. The Dow has broken through the 36,000 point mark. Inflation, which has been dormant for a generation, has risen to unprecedented heights. The total market capitalization of cryptocurrencies is around $3 trillion even when skeptics put its intrinsic value at exactly 0. Driven by its own incarnation of a populist political trend that has swept much of the world, the UK has accomplished a somewhat messy separation from the EU. GameStop has reached illogical heights and has yet to return back to earth, fueled by a revolt of the commons within the retail market, the results of that are prone to reverberate for years to return. And greater than 18 months into the COVID-19 pandemic, our lives are incomparably different. When it involves the character of labor, many years of change have been compressed right into a 12 months and a half.
Prediction: The future will probably be different
It’s an old saying within the financial world that there are only two forms of forecasts: the lucky ones and the flawed ones. And nobody surveying the market landscape in 2011 could have predicted the chaotic swings of the last 18 months, let alone the hectic developments – the shocks, panics, taper tantrums and flash crashes – of the last 10 years. It was unattainable to predict how much would change and the way much wouldn’t.
We have published many forecasts and perspectives in our 10-year history. Some were extremely prescient. There weren’t many. But the lesson underlying all of those efforts is that while the evaluation may not all the time produce attractive returns for our own or our clients’ portfolios, the method itself will still serve us well. And as with the time value of cash, the longer we hold on to it, the greater the general advantages.
If we acquire skills and expertise, read and advise widely, develop and test theories, indulge our curiosity, and all the time deal with what is true in front of us and what’s on the horizon, we are going to understand ourselves and the markets higher , and one another. And that can repay, whether it’s financial or not.
With that in mind, below is a curated collection of a few of our hottest and trusted content. This selection highlights most of the key themes of the past 10 years while offering compelling lessons on how you can approach, understand, and succeed on this planet of finance and investing.
With our first decade behind us, we look ahead to bringing you more and higher insights within the months and years to return and invite you to hitch our community as a subscriber and consider sharing your personal research and perspectives as a contributor.
How to read financial news
Advice on how you can change into a research analyst
How I generate investment ideas
The seven forms of asset ownership institutions
Seven essential steps in portfolio management
The Renaissance of Intangible Valuation: Five Methods
Work and leadership: going it alone
“Your network is your wealth”: Seven suggestions for a profession boost
Aswath Damodaran on takeovers: Just say no
“If you look at the totality of the evidence for all acquisitions,” says Aswath Damodaran, “this is the most value-damaging action a company can take.” Paul McCaffrey examines Damodaran’s argument.
The NIFTY 50 now not reflects the Indian economy
The NMC health debacle: Four warning signs?
Shareholder value vs. shareholder welfare
What most energetic vs. passive debates miss
Fixed-interest investments redefined
Aging and stocks: Sell stocks for the long run
With an aging population, who’s left to purchase stocks? Nicolas Rabener gives his evaluation. His conclusion? “Like passengers on the sinking, investors have no place to hide and no safe haven from which to wait out.”
Living at Risk: The COVID-19 Iceberg
“Life is risk. We adapt, innovate and make intelligent compromises to move forward,” write Laurence B. Siegel and Stephen C. Sexauer. “We manage risk because we cannot live risk-free even if we wanted to. In fact, change means taking risks, and all economic progress comes from change.”
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Photo credit: ©Getty Images / Sean Murphy
