‘A bull market is a sequence of new all-time highs’. This is what I have been trying to convey to the audience on many occasions. Concerns are regularly raised about ‘prices have gotten ahead of themselves’ and ‘never has the price been higher for this asset’.
We launched our mid-year update last week. ‘Stay invested’ was the main message yet again, but a lot of private money is still not invested. All-time highs are a huge hurdle on top.
Buying financial assets at all-time highs proved to be far less risky than you might think. Options are plentiful: European stocks, technology and small-cap stocks – go for it.
I fully understand the argument, but again, if you take any bull market in history, it was all about getting over this psychological hurdle. If you could not overcome it, this was a dead-certain way of missing out on any bull market (I think I wrote about that topic too…). You would not have bought gold in the 1970s, the Nikkei in the 1980s, or the Nasdaq ever since. It struck me again when we launched our mid-year update for the 2021 outlook last week. Investors were asking: ‘Are there still opportunities?’ Technology? Too lofty valuations. China? Political uncertainties. Healthcare? The same. So let us focus on the laggards: Financials? Cheap for a reason. Small caps? Not investable.
Euro Stoxx 50
We react sportively to the pushback, of course. Therefore, we would like to highlight European stock markets for a change. Maybe Europe is the structural bull market that nobody talks about. The Euro Stoxx 50 may still be miles away from its alltime highs (I know: cheap for a reason), yet other country indices have been steadily printing new all-time highs, e.g. the DAX 30, the CAC 40, and the SMI. For those with acrophobia, you may want to take a look at the number of the week. Historically, buying at 52-week highs (which all-time highs are, by definition) has made you double-digit returns.
Number Of The Week
What is going on in the markets? Julius Baer’s experts share their views.