It appears that the confidence and complacency that has dominated the U.S. stock market for several years is now beginning to dissipate. Investor psychology is changing, the market is no longer bulletproof, and many of the high flying stocks are coming down to earth. Social media is facing a reckoning and unfortunate mishaps for Tesla and Uber suggest autonomous driving may be much more difficult to achieve. Regulators and tax authorities are targeting cryptocurrencies, while hackers target their exchanges.
S&P 500: March 31, 2009 – March 31, 2018 on a daily basis Rebased to 1000 on 31 March 2009
Source: MV Index Solutions
We believe that these, amongst others, are signs that the post-crisis economic and stock market cycle is approaching its end. If we are right, gold and gold stocks stand to benefit if the current market transitions to one filled with risks and volatility. We also believe that once generalist investors take the time to assess gold stocks, they will like what they see — companies with strong balance sheets, cost containment, and good cash flow run by managements incentivized by profitability and shareholder returns.
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