Monday Market Movement – Dow 34,000, S&P 4,200, Nasdaq 13,900 – Again

How do we have so many strong openings and end up getting nowhere?

The market has been churning at these highs for quite some time but we’re not making any progress.  This is with “great” earnings and “great” GDP an accommodating Fed and endless stimulus – you’d better be ready to grab a chair when this music stops – it’s going to get ugly!  

Not much for us to do but keep going through the motions.  Until the music does end, the game continues and we’ve been buying a lot of stocks for our Member Portfolios recently – despite my overall misgivings about the market.  

Warren Buffett pointed out something interesting this weeken in Berkshire Hathatway’s (BRK.A) annual report – he pointed out that NOT ONE of the 20 largerst companies in the S&P 500 in 1989 are on that list 30 years later – not one of them.  The biggest company in the World 30 years ago was the Industrial Bank of Japan and 6 of the top 10 companies in the World (13 of the top 20) were Japanese companies and all the “smart” money was that Japan was the place top put money in 1989.  I even interviewed for a job with Mitsubishi myself! 

And talk about inflation!  The top five companies on our list today are EACH worth more than the entire top 20 were COMBINED in 1989.  Of course we use the term “worth” loosely but these valuations have cleary run amock.  In 1989, the Global GDP was $40Tn and now it’s $80Tn yet the top 20 companies have gone up in price from $1Tn to about $16Tn – the cost of owning the companies that produce the Global GDP is now 16x higher than it was 30 years ago – THAT’S INFLATION!

Well, it’s something, anyway.  Just like the cable company and the phone company get more and more efficient at extracting money from your wallet every year – the entire stock market does that through the Investment Banks – making sure there are more fees for them and less stock for your money…

Provided courtesy of Phil’s Stock World.