2019/2020: A Trip to the Wonderland
Life behind the Looking Glass
“Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” (
In this forecast-laden period, many of those who publish their outlooks try to rely on past statistics: some examine how much this or that index yielded after a year of a rally; some scrutinize the data on the “Santa Claus Rally” and the “January Effect”; and some check the performances of indexes in the previous election years. But we wonder whether the statistics accumulated in the times before the global financial crisis are relevant to the period after the crisis. After that financial disaster, the economic and the financial world has changed significantly in many aspects.
If we told the people of the not-so-distant past that the longest rally in the stock market’s history goes on and on, despite political instability, trade war, economic slowdown, and the decline in corporate profits – they would think we are stretching the truth. If we were to describe how the Eurozone was about to collapse due to debts of one small country within it; and how the markets surged in response to the UK Prime Minister receiving the Parliament’s approval, after three years of nerve-wracking saga, to exclude his country from the European Union – they would say we are probably not completely sane. If we found out that today, it is widely believed that central banks can prevail over economic forces and extend the economic cycle indefinitely, it seems – they would be shocked by our apparent insanity. And if we told people in the past that there are countries in the world where the saver pays interest to the bank for the maintenance of his money, and the investor pays for the privilege of holding government bonds, they would think we are crazy like the mad hatter. But this is the world we live in today, and the new rules are learned on the run.