Investors Will Lose A Lot of Money, As Usual
The Nasdaq in ATH
The Nasdaq has once again reached historical highs this week, after a couple of years in which the index fell more than 30%, it has reached new highs. Contrary to what the press said at the beginning of the year, the Nasdaq has managed to make +50% YTD.
This has caused indices like the SPY and the QQQ to experience the most pronounced fund inflows of the last two years. These data support our theory that most investors will never make money in the stock market. I repeat, NEVER.
On the other hand, this reaffirms our investment thesis that it is not necessary to make things complex to make money. There's no need to read 100 annual reports or explore investment ideas in a village in South Africa. Additionally, this has been the worst month for Hedge Funds since January 2021. As you can see, you don't need an MBA from HBS to make money. The 'buy price' is much more important.
Last year we saw the most pronounced bond falls in the last 30 years. This is what happens with an unprecedented interest rate hike. This generated a good buying opportunity.
It's more important to buy at a good price than to sell at a very good price. You control the first, not the second.
Of course, bonds generated a buying point that we will rarely see again with such clarity. In the last two months, the Vanguard Total Bond Market Index Fund ETF has risen by 7%. As if that wasn't enough, these weeks have been marked by the message from central banks that there will be a rate cut in 2024.
A Flock of Sheep
The good situation of this last year has marked that: 1) managers are more aggressive, there is a consensus of a soft landing for 2024. 2) investors' cash has decreased significantly.
This makes everyone ask the usual question. What if we are in a period of prosperity? Well, this is exactly what both managers and investors think.
This leads us to the million-dollar question, is it a good time to invest?