In this video commentary, Tony Ogorek and Jeff Viksjo discuss where the money came from to propel the market up after experiencing the most rapid decline in history.
Hi I’m Tony Ogorek, I’m here with Portfolio Manager Jeff Viksjo, and today we are talking about the massive amount of money flowing into equities. Jeff, what are we seeing here?
This is very striking. The last line on this chart, this light green, that is 2021. It dwarfs all the other years by a factor of 5, by a factor of 10. $1.3 trillion has flown into equities this year.
And don’t forget this doesn’t take into account bitcoin. Doesn’t take into account residential real estate. This is just going to stocks. And if you just look at these, each different color is a different year, and you look at the financial crisis of 2008-09, about $150 billion left the market. For the next few years nobody wanted to put money in because they were scared out of their mind. In 2013-14 about $250 billion went in, then we had a little bit of a hiccup. $93 billion came out, then again about $300 billion in. Fed raised rates and people started to take money out. And then bam, they came in with the stimulus program that was like, from outer space. And when they did that, it’s truly massive what they did, and this is where the money came from to propel the market up as rapidly as it has. It was the most rapid decline in history and it was also the most rapid recovery. This is a picture why that happened.