Van Gogh’s “Starry Night.” Source: MOMA
In the ‘60s it was growth stocks. In the ‘70s it was gold. In the ‘80s we all turned Japanese. The ‘90s had the Nasdaq. The ‘00s saw China’s growth. And now we have the data giants. Each one of these markets rallied some 10-fold during its heyday. What’s next?
One approach is to look for the asset that no one wants. In the early ‘80s Japan just made cheap electronics and small cars, so why bother investing there? In the early ‘90s no one wanted US stocks – the “rust belt” was over, and California had a perpetual real-estate crisis. And rallies in both Japan and the US started with financial crises.
So which market gets no respect, today? One place to look is Europe. The problems with the Euro are well-known: the industrialized north is growing at the expense of the service-oriented south. And financial, economic, and populist tensions are ripping the continent apart. If the Euro fails, all bets are off.
European Union flag.
But all this is priced in. Sir John Templeton once said that bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The best time to buy is when pessimism is strongest.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”