You can count us among the cinephiles of the world, with a special and deep appreciation for the cinematic work of the late, great Burt Reynolds. When it comes to notable movies, they all seem to have a few things, including a top-notch cast, compelling characters, engaging narrative, and of course a memorable tagline. Think “To Infinity and Beyond” (Toy Story); “I’ll be back” (The Terminator); and “Show me the money” (Jerry McGuire) that brings us to the subject of this Weekly Wire – the money that has or has not flowed into US stocks over the past few years and what it could mean for the durability of this new bull market .
Americans have been net buyers of bonds and net sellers of stocks since January 2018. Around $ 659 billion will go into fixed income mutual funds and ETFs, and $ 316 billion will come from mutual fund and ETF stocks (excluding share buybacks), with much of the capital exiting stocks in 2020. We are sure that many of these businesses have been driven by a number of financial planning factors, including age and upcoming retirement. However, we are also sure that many of these deals were driven by skepticism about the outlook for the U.S. economy and the stock market – an understandable consideration given the impact COVID-19 has on both.
Let’s put aside what – we hope and expect – a one-time pandemic catalyzing a bear market is and focus on what has historically happened to or caused a stock market spike. The economy is in full swing, inflation and interest rates are rising, valuations are getting quite strained, and investors have embraced stocks as an asset class. This means that there is no one left to buy, but many people who can sell. Today the economy is only just getting up; Inflation and interest rates are low; The valuation of the S&P 500 index is elevated, but much of it is driven by companies with a P / E multiple, which is justified by disruptive business models, and investors have been balanced avoiding stocks. Chances are this fledgling bull market will show investors the money in the years to come.
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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a registered investment advisor.
Tagged: weekly wire, market outlook, Tim Holland, COVID-19, S&P 500 index, US stocks, US economy, bull market
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