Stock markets love a good story. No tragedies or epic dramas, please. Just feel-good stories where the underdog wins, or hard work pays off, or an ailing company recovers. Positive stories fuel stock markets.
The underlying theme of every good stock market story is growth. Growth is the fuel that keeps investors happy. It is what drives stock prices higher and allows investors to sleep comfortably at night.
Over the last decade, the world has seen amazingly strong growth. Low interest rates have allowed consumers and businesses to borrow money at low cost and reinvest it in everything from home improvements to new factories. China has had a booming economy that has driven massive global growth. The US saw huge technological advances allowing for a boom in the domestic oil industry.
These were all terrific growth stories and they fueled one of the biggest stock market bull runs in history.
Unfortunately, over the last few months, each of these feel-good stories has come to an end. US interest rates are on the rise. Oil prices have plummeted. China is slowing…
So now what?? The good news is that China is still growing, just not as quickly as before. Low oil prices will shake out some high cost suppliers. Interest rates may go up but they are not about to soar. So the news is not all terrible.
But more importantly, this is a fantastic time to refocus. What is the next great story and big opportunity? Is it clean energy? Is it healthcare for an aging population? Is it artificial intelligence? What are 13 to 20 year olds talking about? What are the next things to drive growth?
Keep your ear to the ground, and look out for the next big trends. Do you remember seeing the first iPod? It came out literally just weeks after 9/11, in the depths of national despair. Even in bad times, good stories bloom!