All-Time High Dow Jones, Nasdaq Composite and S&P 500 Index

STOCK MARKETS AT ALL-TIME HIGH!

This is what is happening right now on stock markets in USA, while rest of the world is a bit more divided... Dow Jones hit its high on Nov 24th, NASDAQ Composite and S&P 500 Index had their all time high lately as well. Much driven by Quantitative Easing, released tension in U.S. presidential election, Corona vaccines and some positive market data.

We can read in the news about new highs and people who brag about huge returns are daily highlighted everywhere. As you can see from the grapgh the indexes are at all time high since 1992 adjusted for stock splits and dividends.

 

While markets have reached record highs corona cases have increased, we have a few vaccines and Trump confirmed he may leave the White House. BREXIT is still ongoing, which is a disappointment (did expect to be solved and agreed over a year ago). 

What is happening in the market and how can stocks gain so much under this uncertainty? 

Easy answer is Central Banks, they are currently pumping huge amounts of money into markets causing excess capital to move to any asset class with just a little return. We do see some industries and especially technology stocks gaining much from people using their services more and staying at home. Nteflix for example has benefited from people not being able to go to the movies, so instead tehy watch movies from home. Amazone has benefite from people ordering more online. 

Other topics impacting markets are for example Tesla stock be included in S&P 500 index starting 21th December which may boost the stock a bit as funds and ETFs will start buying the share. Some might have expectd tesla to be included in the index earlier, yet as normal procedure is they usually wait to ensure the company has operated long enough before it is included in an idex and that it has shown profitable numbers at some point.

Airbnb IPO was successful, and the stock is now listed on Nasdaq with an IPO price of 68 USD and opening price on the stock market of 144,71 USD, a huge gain for those who participated in the IPO.

As we see there are many driver to new high, would not be surprised if people have put their additional social security benefit in the stock market which was not the idea. This is also something that worries me, if people put their benefits crated to support living and paying of bills in the stock market then of course we will see new highs but is it based on the economy developing in the same paste or company results improving at the same paste. Short answer is no, it is mainly based on a few companies doing better and the rest on speculation around future gains, which partially is the stock markets driver. These driver seem to explain most of the market gains, what else there is remains to be seen as most likely some explanaitions will be revieled in the future. 

From an investor standpoint it might give some good feeling to see your portfolio value rise with the general market but it does limit your ability to continue buying companies as much starts to be overprized and it takes long to get the investment back.

Let us see how this will continue and end...