Market Musings 13/12/21: five surprising facts about financial markets this year

13th Dec '21 by Edmund Shing

9 comments 2323 reads

I want to point out five facts about financial markets this year that may surprise you.

We all know that 2021 has been in general a pretty good year for investors, whether you were invested in stocks, property or commodities such as oil and copper.

A euro-based investor with a portfolio composed of 60% global stocks, and 40% global bonds would have gained over 13% so far this year, in spite of the recent consolidation phase.

But here are five financial facts for 2021 that you may have not noticed:

Growth stocks have not done as well as you think: while the average S&P 500 stock has gained 24% in 2021 to date, the average Nasdaq 100 stock has only gained 14% this year. The very growth-oriented ARK Innovation ETF in the US has even lost 22% since the beginning of the year, and the average IPO has lost 9% this year, according to the Renaissance IPO index.

Mega-cap growth has led, but highly-valued stocks have under-performed

Source: Bloomberg
Apple’s market capitalisation, at nearly $2.9 billion, is today greater than the total of the UK’s largest 100 companies in the FTSE 100 index! And the Top 5 US tech mega cap stocks are today bigger than the entire European stock market!

Apple is bigger today than the entire FTSE 100 and DAX 40 indices

Source: Bloomberg
Households have increased their cash savings substantially since the start of the pandemic: today US households hold a record $10.7 trillion in cash savings, some $900 billion higher than at the end of 2019. German households hold EUR2.9 trillion in cash deposits at banks, despite an average interest rate of 0%!

Household cash savings continue to rise despite near-zero rates

Source: St. Louis Fed, Deutsche Bundesbank
Fossil fuel prices have exploded despite, or because of the push to renewable energy. European natural gas prices are 5x higher than at the beginning of the year, while Australian coal prices have doubled from January levels, and Brent crude oil prices are 50% higher than at the start of the year.

Natural gas, oil and coal prices all surge on energy shortages, low stocks

Source: Bloomberg
One of the best-performing commodities this year is European…

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mcav82

13th Dec '21

Good afternoon, Edmund

Some interesting statistics and information there to contemplate.

I believe there is one small mistake regarding the mkt cap of Apple….shouldn’t that be 2.9 trillion, rather than billion?

It’s always good to hear your views on the macro-economy. Keep up the good work.

Edmund Shing

Well spotted! at least the chart is correct...

Yes indeed, $2.9 TRILLION ...

Thanks Edmund

sady

RSi is 79 for Apple inc.Do you think its advisable to buy now.Thank you for an interesting article.

Tonysaparito

Good article Edmund. Despite all those savings, I am still of the contrary view we will by this time next year be entering a period of Stagflation.. Only a small proportion of those savings in the West, have been deployed, with the exception of property and some equities but with our future now looking a little more uncertain, most savers in my view will sit tight and do nothing.wishing you a great Christmas.

Harry Hindsight

Are carbon credits a 'commodity'. Good god I need to wake up and smell the coffee! or maybe bitcon/snake oil. Lets go - FOMO.

Both are incomprehensible numbers. Billions, Trillions, Gazillions, loads a money - meaningless.

I'm in the Apple eco-system and unless security/reputation messes up there is no way I'm changing to android alien.

Not a dinosaur - if software does not work then move on - takes time and research but has to be done. Shame companies don't.

Amazon - why drive trillions of miles to find a bird feeder or some such nonsense when you can just pick from a large shed full of it, with nice pictures and even reviews, and delivered on a day of your choice or even where - no brainer - don't know how they make money which is a concern but it's Christmas.

Tesla = Musk = disruptor. Liked Paypal as a facilitator but currently not in favour. In London so my old top tech diesel is now old tech rubbish killing machine. Still can drive 800 miles on a tank lol.

Still love miners as seemingly the fuel to industry - but seems Mr Market has battered the pump in the short term - Ferrexpo, Sylvania, Tharisa - in all of em and will hold - end of days the ICE is not dead by a long way, neither is coal - go on holiday somewhere poor and not California.

curious_1

14th Dec '21

Do you think the monetary authorities are going to leave cash savers in peace or rather erode the value or attempt to drive it out into the economy?

it reminds me of Aesops fable of the the Wind and the Sun. The wind being financial repression causing the plebs to hoard ever more cash whilst the Sun is higher rates counter-intuitively encouraging more spending as the savers relax.

Both the wind and the sun have implications for markets. Well run low debt companies can cope in either environment but if the Sun shines........

dcon85

Fascinating stuff Edmund, I've seen Apple's market cap compared to the total market cap of all crypto currencies (if such a term is applicable), but never to the entire constituents of the FTSE 100! It also seems the Germans are unphased by 5.2% inflation.

MontanaDawn

15th Dec '21

Thanks Edmund! Great article. Have a brilliant Christmas.

Market Musings 13/12/21: five surprising facts about financial markets this year

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Edmund Shing

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