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Market Commentary

2018 – “Peak Year”

By December 10, 2018April 26th, 2024No Comments

There probably was not peak “Brexit hysteria”. Nor peak “voter discontent” throughout the Western world – the unhappiness we’re seeing is not about Trump, nor Brexit, nor the impact of those nasty bankers in 2008. Those are symptoms but not causes.   It’s about debt, demographics and the impact of technology.  The first two certainly aren’t going away, and have been at play for at least the last two decades.

Peak Dow.

The peak was 26,951 on 3rd October.  This is either important or VERY important.  We are midst a correction of 20-30% (after which there will be another much more significant peak) or something much nastier.

Peak Trump.

This was Saturday 6th October, when the Senate confirmed Brett Kavanaugh as a Supreme Court justice.  The Trump momentum was most obviously lost with the midterms on 6th November, when he lost the House of Representatives, and a range of nasty possibilities were opened up.  This will get worse in 2019 as the sugar rush from the tax cuts and reforms wears off.

Peak Complacency.

This is most clearly evidenced in the bond market.  One bond expert highlighted that new bonds offered “some of the worst covenants we’ve ever seen”.  In August the tide began to go out and one bond fund manager was found to be wearing no trunks – GAM had to begin liquidating £5.8 billion worth of absolute return bond funds.  This was “disturbing” action (as the FT put it) for a supposedly diversified fund.  There will be more of the same, much more.

Peak Apple-cum-iPhone.

This was the year when Apple suddenly didn’t have all the stats to hand telling us how many iPhones they had sold – 1st November to be precise.  Funny that.  Many investors following events closely are already out the door.  Keep an eye on results from their component suppliers.

Peak Passive-Aggressive.

If only a couple of this list come to pass in the next 12-24 months, the passives market, particularly ETFs, is going to get a good kicking, as many investors (large and small, expert and novice) realise that ETFs are a very aggressive choice, and that they might need to do something more intelligent than chase low charges.

The Dow could keep rising, Trump could surprise us, humans can certainly be more complacent, Apple might have a resurgence and the ETF mania could continue. All those are possibilities. But just because something is possible doesn’t mean it is probable.


Later in January the latest TopFunds Guide will have a lot to say about 2019.

Dennehy Wealth