Equity markets have always something to worry about. There is always one crisis or another that pops up in this world. Not a single year goes by without a negative event happening. However the beauty of the markets is that they always climb the wall of worry to maintain an upward trajectory. Recently I came across the following chart that shows the timeline of all the negative events from 1990 to 2022. Most of these events caused worry to investors if the markets would crash and if they should get out. A few of these events include the Brexit, Global Financial Crisis and most recently the Covid-19 pandemic. Despite all these and other noted events the MSCI World Index continued to go higher and higher each year. Though the chart ended with 2022 data, if we extend it to 2023 or even up until now the chart would reach much higher records since markets soared last year and year-to-date this year.

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Source: The view from Barley Mow, Permanent Wealth Partners

The key takeaway for investors is that negative events should not be a reason to sell out equities. Markets have always a tendency to be volatile in the short-term when some adverse event occurs but they recover eventually.

Related ETFs:

1. SPDR S&P 500 ETF (SPY)
2. iShares Core S&P 500 ETF (IVV)
3. Vanguard S&P 500 ETF (VOO)
4. iShares MSCI Emerging Markets ETF (EEM)
5. Vanguard Developed Markets Index Fund ETF (VEA)

Disclosure: No positions

The US equity markets are on a tear this year with the S&P 500 up by over 5.5% year-to-date. Many individual stocks have shot up even more. A few have already doubled or grown by over 50%. And we haven’t completed two months in this year. One of the hot stocks of the AI-driven rally is the US-based chip company Super Micro Computer Inc (SMCI).

Stocks of SMCI crossed over $1,000 a share last week and reached a peak of $1,077 before falling 20% to end Friday at $803.22. Despite the loss, Super Micro has soared by 182% YTD. Currently it has a market cap of about $45.0 billion. Out of about 56 million shares outstanding, 33.5 million shares were traded on Friday.

I came across the below chart posted by Kerry of Market Index in The Weekly Wrap:

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Source: Market Index

The surprising rise of SMCI brings back memory of another hi-flyer of the recent past – GameStop Corp(GME). The brick-and-mortar game store chain soared to astronomical during the covid-pandemic fueled by hype only to fall back to earth dramatically. Though the companies in entirely different industries the charts are indeed striking. It remains to be seen in Super Micro can continue the momentum and stay at elevated levels. One thing that differentiates Super Micro from the GME saga is that there are many other AI-hyped stocks that have shot up as well. However Super Micro is an outlier with outsized gains in a such as short period.

The following chart shows the 5-year return of GameStop vs. Super Micro:

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Source: Yahoo Finance

Disclosure: No positions

The astonishing growth of social media in recent years has not only changed how we communicate with one another but also changed the dynamics of disruption. Social media influencers with millions of followers for example, can launch a product and disrupt an established player selling the same product. By selling the same product at a lower price or a higher price these new entrants can grab market share from the big companies. Last year, Prime energy drink that was launched by influencers Logan Paul from the US and Olajide “KSI” Olatunji, who is from the United Kingdom became popular especially in the UK. The craze for the drink led to soaring prices and some even imported from the US.

I recently came across an article where another social media influencer has disrupted the American candy giant Hershey Co (HSY). The following chart shows the impact of influencer Mr.Bean’s Feastables on Hershey’s stock price:

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Source: Inflation and market dynamics, Robeco

In May 2023, Hershey closed at over $276 per share. Since then the stock has fallen to as low as $182. Yesterday it closed at $193.72.

Though the full decline in stock prices cannot be attributed to the influencer it still shows the power of influencers and their ability to take on multi-billion dollar giants.

Disclosure: No positions