By Kelley Wright: Published July 2018
From the beginning of the 20th century to today, there are myriad identifiable paradigm shifts in the investment landscape. Typically, these shifts are recognized after the fact, in the rear-view mirror if you will.
After the Crash of ’29 there was a paradigm shift in how corporations disclosed information to the public and how markets and market makers were regulated. In the late ‘60’s through the mid-70’s there was a paradigm shift among investors where value was discarded for “growth at any price,” also known as the “Nifty Fifty” era.
Leveraged buyouts and junk bonds in the 80’s, the explosion in tech and dot-coms in the ‘90’s, the widespread acceptance of derivatives in the credit and mortgage markets in the 2000’s, all represented paradigm shifts in investor thinking.
Another paradigm shift was the role the Fed played in the economy and the markets as a result of the extraordinary measures utilized after the financial crisis. In my opinion we are at the early stages of another paradigm shift, where the Fed is exiting from that role, and the markets and economy will be driven by supply and demand, earnings, and GDP. This is to say it will not be enough to just buy a collection of index funds or ETF’s, you had better know how to identify quality and value in individual stocks. Enlightened investors, this is our time.
That is all, now soldier on.