It's not you. The market doesn't always make sense.
Have you ever found yourself thinking, "I really don’t understand how stocks and investing works." Fear not, because more often than not, the world of finance doesn't follow a logical script.
Last week, amidst the backdrop of global uncertainty, the S&P 500 reached an all-time high. In the face of geopolitical tensions, election uncertainties, and high interest rates, you’d be forgiven if you were left scratching your head at that result. The market simply doesn’t always make sense. Allow me to illustrate three intriguing cases that underscore just how unpredictable the market can be.
Case number one. The blue line in this chart has been one of the most important names in entertainment and certainly the greatest vault of intellectual property on the planet. The green line is a hot dog stand.
Yes, Nathan’s Hot Dogs has absolutely pummeled Disney stock since 2000.
Case number two. In this next chart, the green line is one of the largest and most powerful financial institutions in the world, Goldman Sachs. The blue line makes baking soda and kitty litter, Church & Dwight Co (think Arm & Hammer and OxiClean).
Case number three. In this last chart, the blue line is one of the world’s largest semiconductor chip manufacturers powering the latest and greatest technology, Intel. The green line makes croutons and veggie dip, Lancaster Colony Corp.
If you’ll humor me, consider one additional case. Boeing currently has a 1 year return higher than JetBlue, American Airlines, and Southwest. I don’t know if you’ve heard, but Boeing has been in a PR dumpster fire for the better part of a year. Let’s recap their snafus just from the last few weeks.
Last week, a Boeing cargo plane made an emergency landing after FLAMES were seen shooting out of the plane. FLAMES! 🔥🔥🔥
Earlier this month, the door blew off the side of a Boeing Max 9 passenger aircraft on an Alaska Airlines flight.
In another incident, US Secretary of State, Antony Blinken, was stuck in Davos, Switzerland, after his Boeing broke down faster than a TikTok trend.
So, what's the lesson here? The market's eccentricity stems from its diverse participants—people. With billions of actors in play, each with unique perspectives, motivations, timelines, and risk preferences, the market becomes a complex stage. Understanding its daily dance requires grappling with billions, if not trillions, of variables.
The takeaway? Patience is key. Some days are bewildering, others are exuberant, but the truth usually lies in the middle. It's seldom as dire as it seems and rarely as fantastic as it appears. Progress unfolds steadily with the understanding that, much like a market participant, it doesn't always make perfect sense.
In the midst of this financial theater, one thing remains constant: having a well-thought-out strategy and a long-term vision is paramount. As we navigate unpredictability, remember the key to financial success often lies in patience, strategy, and a steadfast commitment to your long-term goals.
We’re grateful for you and your continued trust and confidence. Should you have any questions, feel free to reach out to our team!
Many thanks,
Tyler Martin, CFP®, CPWA®