2021 felt like 1999

 

Time flies! It is such a coincidence that my last blog was exactly three years ago.

 

I have told quite a few friends in 2021 that it felt like 1999. Will 2022 be like 2000? I am not sure yet but it is certainly getting close. If Nasdaq drop 30% in the next few months, I would certainly say that now is like 2000 and it will drop a lot more after some violent bounce. What I am not sure is that the time lengthen still seem not there. The bull market from 2009, especially for Nasdaq, feels like the slow motion and extended time version of the 1990s. So if that is right, then we could have a close to 20% drop in Nasdaq and then have another few years of bull markets, just with more volatility than what we had before. The answer will reveal itself in the next few weeks.

 

What is certain is that after the 2000 moment finally descend on US markets, the other markets will drop significantly too, including the already bounced up emerging markets and commodities. Even with the sharp bounce of emerging markets and commodities in the last few years, they still go nowhere compared to 2011 (around or below the level in 2011), when I predicted their underperformance relative to the US markets. In comparison, the SP500 index is about four times of what it was in 2011 and Nasdaq 100 almost eights times.

 

After this much needed sharp drop in the US markets, whenever it really comes, US small value, and particularly commodities and emerging markets could start a very sharp and relatively sustained rally. It won’t probably be as big or sustained as the 2003-2008 rally as it is unclear any huge emerging markets as big as China at the time will go through the industrialization process. India may still not be there yet. But even without such a big pull like China’s industrialization, it is something that could yield many stocks with 1000% returns within a short few years. Hope it can be much closer in time. However, if the deep bear market for Nasdaq is still a couple years away, this opportunity will then have to wait for a few more years.

 

Let’s see about the answers from the development of Nasdaq in the next few weeks.