By Long Short Trader The Nasdaq is “only” ~20-25% off its 2000 all-time highs. The S&P 500 and Dow hit all-time highs this year. The Nasdaq looks “relatively” inexpensive. Some market participants, therefore, have naturally begun to wonder whether the Nasdaq will hit new all-time highs in coming years.
It is my belief that the advent and adoption of electronic trading in the 1990s (coinciding with the revolutionary and transformative effect of the internet on the real economy) played a key role in propelling the NASDAQ to its euphoric heights.
Then I saw the following recently, and thought that its launch and eventual adoption would help the NASDAQ reach new heights:
Yarra Square Partners returned 19.5% net in 2020, outperforming its benchmark, the S&P 500, which returned 18.4% throughout the year. According to a copy of the firm's fourth-quarter and full-year letter to investors, which ValueWalk has been able to review, 2020 was a year of two halves for the investment manager. Q1 2021 hedge fund Read More
I might add that robinhood is backed by Google Ventures, Andreesen Horowitz, and other venture investors.
I personally believe that a 1998-like market correction in the near future, coupled with these type of developments will make it increasingly likely that we will see the NASDAQ hit new highs. Robinhood (and Hugh Hendry’s very public faux-capitulation) may serve as immediate term contrary signals (say within the 1-4 quarters), but a medium term leading indicator (1-2 years).
The US economy does not appear to be experiencing the structural improvements, and productivity gains it was experiencing back in the 1990s. As a result, I wonder how long-lasting new highs in NASDAQ will last this time around.
Now, if only innovators were to find a way to reduce the mean and median investment banking / advisory fees (IPO, M&A, etc) , say to <1% of capital/deal sizes… that would serve as a free-market not centrally planned) means of redistributing wealth away from Wall Street, and back to Main Street + Tech.
Although I hope to one day become a half-decent macro investor, I will focus on securities selection for the time being.