3 dispatches
I spotted this memo from Oaktree Capital founder Howard Marks and thought it was a sobering and grounded take on what makes a stock market bubble and reasons to be alarmed about the current concentration of market capitalization in the so-called “Magnificent Seven” and how eerily similar this was to the “Nifty Fifty” or the “Dot Com Bubble” eras of irrational exuberance.
One of the core assumptions of modern financial planning and finance is that stocks have better returns over the long-run than bonds. The reason “seems” obvious: stocks are riskier. There is, after all, a greater chance of going to zero since bond investors come before stock investors in a legal line to get paid out after a company fails.
S&P500 Performance for 2020 (Yahoo Finance), pulled Jan 17, 2021 2020 has seen the greatest market volatility in history for American stocks. The roller-coaster ride investors have experienced over the last 6 months included a steep ~33% single-month drop followed by a four-month bull market run taking the S&P500 back roughly to where it started.