A decade ago this week, stockmarkets in the developed world hit their financial crisis rock bottoms. In the US, the S&P 500 hit the appropriate mid-session low of 666 on 6 March 2009.
In the UK, the FTSE 100 bottomed out a bit earlier hitting 3,512 on 3 March. Later that week, the Bank of England (still run by Mervyn King at the time) announced it would start quantitative easing (QE printing money). The Federal Reserve in the US had already started its own QE programme in November 2008. On both sides of the Atlantic, banks had been bailed out or part-nationalised all over the place.
Why did the market bottom out at that point? Things still looked incredibly bleak. The economy was in recession. Everyone feared for their jobs (assuming they still had them). House prices probably the key barometer of economic health for the average person in the street were crashing (although the collapse in interest rates soon reversed that). And no one had any idea of what printing money or propping up so many different sectors of the economy (we all talk about the banks, but car manufacturers got a fair bit of help too) would do to inflation, or the financial system, in the long or the short term.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
For me, the "tell" was when one broadsheet put out a front-page headline on the financial crisis, illustrated with a picture of St Paul's during the Blitz it was the kind of hyperbole that would make any rational bystander think: "Okay, things are bad but they're not that bad".
The obvious question now is: ten years on, where are we now? Stockmarkets have barely looked back since that week in March. Indeed, in the US stocks have managed a virtually unbroken bull market since (depending on exactly which definition you use and which index you're measuring, of course there were some pretty dramatic wobbles in 2011 and 2015, not to mention last year's bout of panic).
And yet I'd be hard pushed to describe today's investors as carefree. Markets may not be cheap, but investment is being driven more by a sense of oppression a sense that there's no other option but to take a risk. So I suspect there's life in the bull yet as long as you avoid the most ridiculously overvalued parts of the markets.
Matthew Partridge has suggestions on where you canfind promising smaller companies in our cover story this week (if Brexit isn't as catastrophic as the most hysterical headlines suggest, smaller domestically focused UK stocks might have particular appeal).
Marina Gerner suggests a couple of China funds also in this week's issue China might be opaque and risky, but it's also cheap, having endured its own nasty bear market. And if you're not convinced of the bull case, do read Merryn's interview with financial historian Russell Napier Russell explains why gold is a good buy, even if we face another potential deflationary collapse, as he fears.
And if you'd like to get hold of The Sceptical Investor, MoneyWeek readers can get 25% off.
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
-
Car hire and the strangeness of the post-pandemic economyEditor's letter A global shortage of hire cars and unusually high hotel occupancy rates sum up the post-pandemic global economy in a nutshell, says Merryn Somerset Webb, with enhanced demand meeting restricted supply.
-
Why we need to get a grip on our governmentEditor's letter Our government is trying to do too much, enacting policies that are destructive to the private sector. It needs to drop the the feel-good nonsense and create policies that lead to long-term wealth, says Merryn Somerset Webb.
