The S&P 500 hit 22 new all-time closing highs in 2019 and just continued its record setting into 2020; the top five public U.S. companies now hold a record 18% of the benchmark’s total market cap—higher even than during the tech bubble—but net income is failing to keep up. The dawn of a new decade often brings nostalgia, but do we really want to be revisiting the late 90's (with the dot-com bust and '00-'02 recession hot on its heels)? Investors interest in tech certainly hasn't gone away over the years; can you guess which four companies accounted for ~20% of the index's 2019 total return? And could continued strong performance (perhaps sparked by yesterday's surprisingly strong start to earnings season) push us into a final blowoff? Finally, yesterday's CPI report was roughly in-line with expectations and shows stable inflation, but it has us wondering two things: 1) does the emerging trendline indicate additional increases are in store, and 2) will the data lead the Fed to leave interest rates unchanged through 2021?
1. We have heard this song played before in the late 90's...
Source: WSJ Daily Shot, from 1/14/20
2. ...and the top 4 companies accounted for ~20% of the S&P 500's 2019 total return!
Source: WSJ Daily Shot, from 1/14/20
3. Is the market entering the final parabolic growth phase often seen at the end of a bull?
Source: WSJ Daily Shot, from 1/14/20
4. What paying a 1% management fee and 20% of profits has gotten you:
Source: WSJ Daily Shot, from 1/14/20
5. Has U.S. inflation established an up trend?
Source: WSJ Daily Shot, from 1/15/20
6. Sorry, I can't get on board with this one... unless my three boys' colleges didn't get the memo...
Source: WSJ Daily Shot, from 1/15/20
Did you miss the release of BCM's Q4 market commentary yesterday? Click below to get a quick digest of market events & themes and a look at how the past 10 years compare to earlier eras in "BCM 4Q19 Market Commentary: Will the Next Decade Look Anything Like the Last Two?"
Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.
