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This is a difficult cycle to understand. The shares of Facebook, Amazon, Apple, Netflix, Microsoft and Google have all boasted strong returns over the past year, together accounting for almost half of the total return of the SP500 despite making up only 15% of market capitalisation. Is this a bull market or a bubble?
Maybe it’s misleading to compare what’s going on to earlier booms. In the current market, it is investors’ fear of losses, as against their desire not to miss out on gains, that is fuelling price distortions. And new investment vehicles and strategies are amplifying the effect. Drawdown risks may hide in unexpected corners.
History doesn’t always rhyme
The saying goes that history doesn’t repeat, but it rhymes. Yet...
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