8/31/2018 Weekly Update: 1998 Redux?
by Zach Marsh on Aug 31, 2018
S&P 500 +0.95%
10 Year Treasury -0.27%
Weekly Update: 1998 Redux?
For those who study the financial markets it is hard to overlook the similarities between today and 1998. Stock markets are setting record highs after recovering from a fairly deep correction. Emerging market debt concerns are rising, subtly contributing to daily volatility. And, a Special Council in Washington is preparing to release its findings, potentially putting the sitting President in the middle of an impeachment hearing. Pretty hard to overlook those similarities, huh? But, then again, like trying to rekindle a lost love, the details may rhyme, but the feeling just ain’t the same.
Looking back at 1998 from the experiences of the past 20 years it feels as if those were a heck of a lot happier and more optimistic times. We sat at the beginning of the internet and technology revolution; mesmerized and enthusiastic about its potential. Terrorism, while beginning to attract our attention with the August bombing of the American Embassies in Kenya and Tunisia, was far away and far from a threat to us here. The stock market had everyone excited and many people actively trading stocks as low-cost online brokerage firms seemed to pop up every day.
As a society, instead of sharing posts on Facebook, stories on Instagram, or tweets on Twitter to the anonymous ether world of social media; we shared jokes from the previous night’s sitcom with our co-workers over coffee. We certainly didn’t feel that we lacked or wanted for anything in 1998, but yet it seems as if so much has changed, and many of the changes have become so ingrained in our habits that we couldn’t see living without them. The future, based on technological innovation, which we eagerly anticipated and embraced, did not fail to deliver. But, maybe that hasn’t always been a good thing. I don’t want to sound like Archie and Edith at the piano, but there does seem to be a void of optimism and enthusiasm today versus 20 years ago, and I can’t quite seem to ignore technology’s impact on that void.
However, it can’t just all be the fault of technology. The “inter-boom” years were not kind to us as a nation. The new millennium brought terror and fear to our shores in 2001. A deep and lasting bear market between 2000 and 2003. A contentious election in 2000 and 2004, further exacerbating a combative and vitriolic culture in Washington. We fought two major wars costing trillions of dollars, in what now seems to be solely a reaction to our fears, anger and insecurities as a people. We suffered a credit crisis in 2008, bringing our country’s financial institutions, and our economic way of life, to the brink of destruction, not to mention adding to our fears and insecurities. An election run in 2008 on “Hope and Change,” ultimately failed to inspire either feeling in our nation. Now, here in 2018, following the most contentious election in recent history, the story told by our financial markets is that the United States remains the undisputed, most vibrant and growing economy on the planet. Yet none of us believe it.
It takes time to recover from trauma, maybe that is just it. For my part, I remain optimistic that we will recover; politically, economically, and societally. Maybe our economy and stock market can continue to grow long enough for our hope and enthusiasm to return. Hopefully we can arrest our insular ways and come together and re-commune as a society. I hope your Labor Day weekend provides you an opportunity to do all of these things. Enjoy your break and let’s see what the final four months of the year will bring us.
Thanks for reading,
Zach and Dave
All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results. Tax laws are complex and subject to change. Calibrate Wealth LLC, does not provide tax or legal advice and are not “fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Calibrate Wealth. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.
This material does not provide individually tailored investment advice. It has been prepared without
regard to the individual financial circumstances and objectives of persons who receive it. The strategies
and/or investments discussed in this material may not be suitable for all investors. Calibrate Wealth
recommends that investors independently evaluate particular investments and
strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a
particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Investing in commodities entails significant risks. Commodity prices may be affected by a variety of
factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii)
governmental programs and policies, (iii) national and international political and economic events, war
and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities
and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other
disruptions due to various factors, including lack of liquidity, participation of speculators and
Foreign currencies may have significant price movements, even within the same day, and any currency
held in an account may lose value against other currencies. Foreign currency exchanges depend on the
relative values of two different currencies and are therefore subject to the risk of fluctuations caused by
a variety of economic and political factors in each of the two relevant countries, as well as global
pressures. These risks include national debt levels, trade deficits and balance of payments, domestic and
foreign interest rates and inflation, global, regional or national political and economic events, monetary
policies of governments and possible government intervention in the currency markets, or other