3D Market Analysis: Will 2021 Rhyme 1999?

Everybody publishes a year-end review, which largely tells us what we already knew and occasionally provides insight into why events played out as they did.

Next-level asset managers put all that aside the first chance they get and start looking toward the future. What might happen? What's likely? What's possible?

3D has put out a really good one this year. We've excerpted it below, but if you want more detail (or maybe a green light to work the insights into your own client education materials) our VIP Messenger will facilitate the process.

And now, without further preamble, the 3D team:

We received a cartoon-a-day calendar for the holidays, and the foreword noted that the 2021 calendar season has the same calendar day layout as 1999. So, if you had kept an old 1999 calendar, you could use it to track the 2021 calendar year (even though there are many more holidays to keep track of in 2021 versus 1999).

History does not repeat itself (even if it may rhyme per Mark Twain) and correlation does not equate to causation, but how ironic would it be if today’s market euphoria tracks similarly to that of the 1999 craze for technology and internet stocks, down to the same calendar year layout? In hindsight, we know how 1999 ended (a 2000-2002 bear market), but it is not clear whether 2021 will follow the same course.

And yet here we are standing on a mountain top of investor euphoria that has driven up global equity valuations past their 10-year highs and corporate borrowing costs down to absolute lows not to mention speculative fervor surrounding today’s go-go growth darlings such as e-commerce, cleantech, and cryptocurrencies (abetted by the resurgence in retail day-trading – another artifact from 1999). In some fashion, it’s hard to believe the market meltdown of March/April 2020 even happened, especially if you find yourself on the upper part of the K-shaped recovery, or if your investment style has more of a growth/momentum orientation as opposed to value/dividend yield.

And who would want to step in front of this train of investor euphoria powered by a zero-interest rate environment? Institutional and retail investors have flocked into cryptocurrencies with analysts anticipating Bitcoin’s market valuation to reach $1 trillion in 2021 as investors suddenly realized the inherent scarcity of digital currencies whose supply is largely determined by complex problem-solving algorithms.

And whether online meal delivery or vacation home rentals, the ‘app’ business model has helped push 2020 initial public offerings into stratospheric territory as the FTSE/Renaissance IPO Index returned almost 100% in 2020 after having dropped nearly 40% during the March bear market.

The narrative continues with a lot more detail and documentation on the 3D site.


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