All posts tagged: Volatility

Are you onboard with the A.I Supercycle?

Seldom do I write in between my typical quarterly cycle of economic commentaries, but I feel compelled to do so today. Do you know what an economic “Supercycle” is? Depending on how old you are, you have witnessed at least one or two in your lifetime, and some of you have witnessed more. An economic Supercycle is a sustained period of expansion usually driven by robust growth in demand for products and services. (I pulled that definition from a Google search, which now seems so antiquated considering what lies ahead.)

Examples of macroeconomic Supercycles include the industrial revolution in the late 1800’s and the information technology revolution of the last 25 years, just to name a couple you are familiar with. For investors, Supercycles are economic tsunamis of innovation that create significant wealth opportunities for those who can both see it coming (but may not be able to define or describe it) and who are willing to risk their investment dollars to benefit from it.

Future BrightAre you onboard with the A.I Supercycle?
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“Risk happens slowly…then all at once.”

2023 Q2 Market Commentary…

Approximately 50% of the NASDAQ 100 Index is concentrated in just seven stocks – Meta, Apple, Google, Microsoft, Amazon, NVidia, and Tesla. These seven stocks had a solid quarter in performance terms, yet only Apple stock is trading anywhere near all-time highs set back in the fall of 2021. Perhaps, these seven stocks were viewed by investors as a “safe haven” amidst a broader stock market that does not look much healthier than it did in all of 2022.

Tens of thousands of employees were let go by these seven companies and others in the first quarter of 2023. Job cuts can provide a boost to the company stock price, but it’s a strategy that only helps the bottom line, not the top line. It’s the top line (gross sales and revenue) that matters most, and the next wave of quarterly earnings this spring could paint a dismal picture across many companies and sectors. Nevertheless, for at least the first quarter, tech stocks gave the market some relief. (See Q1 2023 performance chart below)

Quarter 1, 2023 Performance Chart

Future Bright“Risk happens slowly…then all at once.”
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Stock Market Volatility… How do you cope?

Stock Market Volatility
How do you cope?

It’s no secret that the sustained generational low levels in interest rates have helped the stock market climb to near record highs over the past decade. Many would assert that the record rise in stock prices is artificially propped up under monetary policy decisions that have forced savers to take on more risk in order to find more acceptable returns. Nevertheless, for those of you who have not let volatility of stocks shake you into making bad decisions, you have been rewarded for sticking with stocks despite the general public’s irreverence towards them. Low interest rates have certainly played a part in your success, but not all of it.

Many people view stocks in the context of “how long will the party last?” It’s a rational thought, especially if you’ve lived through some vicious downturns like 1987, 2001, and 2008. Yet, underneath the shadows of some pretty dreary market conditions, transformative technologies still emerged amidst the wreckage, and they don’t get enough credit for the role played in the economic recovery and subsequent rise of the stock market. Apple, Google, Facebook, Netflix, and Amazon are the sexy names that grabbed the headlines, but what about the likes of Nvidia, Intuitive Surgical, Lululemon, and Regeneron? They are just a few lesser known names that have played a part in the market’s rise, and I could name several more!

Ross AlmlieStock Market Volatility… How do you cope?
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