Mark Twain once said, “History does not repeat itself, but often verses.”
Ed Yardeni, chief investment officer at Yardeni Research, applied those words to what, for most observers, should feel like a unique climate to play the market these days.
But that is not necessarily the case, according to Yardeni.
“We live in interesting times, though not unparalleled,” he wrote in a blog post. “The noise of the 1920s could be a precedent for Roaring 2020s.”
For example, he compared the coronavirus pandemic to the Spanish flu of 1918, which killed an estimated 50 million people and infected about 500 million worldwide.
“The good news is that the bad news during the previous precedent was followed by Roaring 20,” Yardeni wrote. “So far, the 2020s have started with the pandemic, but there are many years left for the prosperous 1920s to become a precedent for the current decade.”
The core of the next boom, as it was in 1920, will be increased productivity by technology.
“Today’s convicts may be confused by the biotechnological innovations that provide not only a vaccine for COVID-19, but for all coronaviruses,” Yardeni said. “Scientists are investigating a range of approaches to fighting COVID-19. Hopefully, beyond finding a cure or vaccine, one of the beneficial results of this whole study will be for scientists to learn far more ways to fight diseases in general and viruses in particular. “
Add this to robotics, AI, nanotechnology, blockchain, electric vehicles, quantum computing, etc., and, as Yardeni suggests, we could see a historic transformation, as well as advances in transportation, manufacturing, electricity, and plumbing that followed 100 years ago. first.
What does it all mean for the stock market?
Well, as Yarden told customers in a note Wednesday, he sees a strong end to the year for the S&P 500 thanks to historical stimulus and a steady bullish trend. Acquisition will increase in 2021, where S&P could end the year with a double-digit pop, he predicted.
“The 1920s ended with a stock market merger followed by a merger,” he said. “The 2020s may already see a meltdown, starting on March 23rd.”
If history has, indeed, rhymed, this rally has plenty of room to run, but investors may want to mark their calendars for fall 2029.
Meanwhile, the stock market mixed in Thursday’s trading session, with the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) losing some ground while the Nasdaq (COMP) higher technical composite was higher.
Gallery: Big financial bubbles that explode spectacularly (Lovemoney)