Well it's official. As of Friday's close (a close that was likely influenced by the quad-witching event and a handful of S&P index rebalances), the S&P 500 is now up +20.05% from the 12/24/18 panic low. Wow talk about a joyride to the upside!
Along with the market's surge higher, which, for the record, has NOT experienced the typical "retest" phase, comes a healthy dose of "seller's remorse" (you know, where anyone silly enough to think that December's dance to the downside was anything more than a brief bout of "algos gone wild," is now regretting their decision to manage the risk of the environment), S&P "envy" (be honest, how many advisors out there have taken calls recently about "keeping up with the S&P?"), and a little something called FOMO (fear of missing out). And from my seat, all of the above have combined to produce the relentless march higher.
The headlines touted last week's action (which at +2.9% was the best gain since November) as a resumption of the trend. A breakout. And a reason to celebrate.
In speaking with fellow financial pros last week, the takeaway was that the investing public has been quick to simply brush aside the -19.8% decline that occurred between September 26 and Christmas eve. And since the Fed is apparently (key word) on hold and the trade deal (the deal that technically has not yet been reached) is expected to rejuvenate the global economy, investors appear to be most concerned about not missing the upside from here.
It seems that everything looks great now and once the trade deal gets inked, both economic and earnings growth are sure to surge, right?
As a result, last fall's fear of policy mistakes and #GrowthSlowing has been replaced with performance anxiety. Buy the dips ...