September 13, 2018

THE EVER MORE BORING CREATION OF WEALTH:

We're Living in What May Be the Most Boring Bull Market Ever: In an age of index funds and private companies, even a boom can feel blah. (Chris Nagi, September 13, 2018, Businessweek)

Cheered by what's become by some measures the longest bull market on record, U.S. investors have plowed money into U.S. stock exchange-traded funds at a rate of almost $12 billion a month since the start of 2017, five times as much as seven years ago. There are signs of stress--like the recent sell-off in Asia--but so far they appear in U.S. investors' peripheral vision. Anyone buying stock in an American company right now must be comfortable paying two or three times annual sales per share, a level of shareholder generosity that hasn't been seen since the dying throes of the dot-com bubble. [...]


[T]his isn't like the boom of the late 1990s. Rarely do companies have initial public offerings where their stocks double on the first day of trading. The tip-dispensing cabbies of the bubble era are driving Ubers now, and any money they have to invest is going into ETFs, not individual stocks.

That's what it's like now: a market with fewer human voices, where the hum of computers is the background music to math projects with names like smart beta and risk parity. It's a land ruled by giants. Three, to be exact--Vanguard, State Street, and BlackRock, which manage 80 percent of the $2.8 trillion invested in U.S. stock ETFs. IPOs, once the life of the market party, have turned into inconveniences in a world dominated by passive funds, occasions for reordering delicately balanced indexes.

The entire boom feels the same for people, because it has been steady and sustained--since TARP saved it--rather than spectacular.  

Posted by at September 13, 2018 3:58 AM

  

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