As of Thursday's close, the Dow Industrials were ahead by 1,073 points (2.60%). NASDAQ has put on a massive 6.60% gain, up 1,183 points. The S&P 500 is up a more modest 4.54%, or 257. points. The NYSE Composite is up 457 points, lagging the field with a 2.41% gain.
While these indices have, over the past six weeks (since April 2, "Liberation Day"), moved from beneath their 50 and 200-day moving averages to above them, excepting the Dow, which is still in between, they remain off their all-time highs. That shouldn't be a problem for most investors, who are likely more relieved that their 15-25% portfolio losses are now more along the lines of 2-5% lower and at just about break even year-to-date.
Even better, long term investors, especially since the GFC crash that bottomed in March 2009 (coincidentally, right around the time bitcoin became a "thing"), have benefitted from buy-and-hold or buy-the-dip strategies, with passive investors multiples higher off lows on the Dow, NASDAQ, and S&P of roughly 7,200, 1,400, and 750 on the Dow, NASDAQ, and S&P, respectively.
Passive investors who bought the bottom in 2009 up on average eight-fold. A hypothetical $10,000 invested in March 2009 would be worth somewhere in the range of $80,000 today. A person contemplating retirement at 50 years of age in 2009 with 100,000 invested, might have already taken the plunge at 62 (2021), riding the wave through the pandemic scare with a nest egg of around $800,000 today.
Whether or not that's enough to retire on is largely a choice of lifestyle. A 5% annual drawdown of $40,000 a year, or $3,333 per month, certainly would provide more than enough to survive and thrive in the golden years, and that's before adding in Social Security remittances. By comparison, gold is up just more than 80% since the GFC.
It's obvious that the Wall Street casino has made millionaires galore out of the extremely patient cohort of passive investors. Despite the gloom-and doom clanging from goldbugs and non-believers, simply going with the flow has been a winning strategy. Buyers of dips have fared even better.
An argument can be made that lower purchasing power of the US dollar over the years has eroded the value of stock and bond portfolios, but, asset inflation being the forerunner of consumer price inflation, an eight-fold increase in asset value easily more than offsets the rampaging inflation of 2021-2023. Those harmed the most by declining purchasing power are in the lower classes, those who don't own stocks and have not participated in some of the best consecutive years of gains in stocks, ever.
President Trump's promise of an American "golden age" will have to pull the middle and lower classes higher with better, higher-paying jobs in a revitalized U.S. economy. Re-shoring of industries will have to play a large role if Trump's promise is to be realized.
Long story short, America's economy, while somewhat unbalanced, favoring asset allocators over laborers, remains the envy of the world and may become even more dominant in years to come.
An exemplar of the change in attitude concerning America's fortunes can be seen in the recent collapse of the gold price, which is being hammered lower again today, dropping another $60-80, down as low as $3,156 this morning. Despite being up 20% year-to-date, gold has lost nearly half of that gain in just the past week. There was every indication - especially with the gold:silver ratio over 100 - that gold had gotten ahead of itself, the rumors of a new gold-backed BRICS+ currency not withstanding. Trump has countered any BRICS+ aspirations with an unexpected surge of global deal-making and probably never before seen.
Gold may turn in the second half of the year from the best asset to the worst. Silver should benefit from gold's short-term demise with the GSR returning to somewhat more normal levels because of its use as an industrial metal over that of a monetary one. Industrialization on a scale that the Trump approach is promoting will require huge amounts of silver, copper and other raw materials, keeping their prices stable, if not raising them substantially.
In less than four months since his inauguration, President Trump has overturned the tables of global trade and he's only just begun. The next three to four years and beyond may be the most prosperous ever seen in the history of America, which turns 300 year old in just over a year from now.
With markets set to open in minutes, futures are higher. Dow futures: +120; NASDAQ: +40; S&P: +14. Buy and hold is here to stay.
At the Close, Thursday, May 15, 2025:
Dow: 42,322.75, +271.69 (+0.65%)
NASDAQ: 19,112.32, -34.49 (-0.18%)
S&P 500: 5,916.93, +24.35 (+0.41%)
NYSE Composite: 19,784.69, +156.23 (+0.80%)
Posts
No comments:
Post a Comment