The Stock Market Has Changed Character Lately

Apr 6, 2021 | Investing

On the Trey Ware Show, Karl Eggerss discussed how the stock market has changed in the past year. Investors need to understand what’s in their portfolio.

Trey Ware:                         Trey Ware. KTSA. US market’s trading lower one day after a new record high is set. Let’s go to Karl Eggerss, creatingricherlives.com, and he can tell us all about it. Hey Karl.

Karl Eggerss:                      Hey Trey, how are you doing?

Trey Ware:                         Doing very well. So what about this?

Karl Eggerss:                      Well, the market continues to push higher and I think people driving around in their car right now or listening to us are getting a little bit… They’re still a little confused as how high can this thing really go. And you have to remember, this is like a rubber band or dropping a rubber ball, we had such a dramatic drop in the economy and the stock market that it’s recovering. It’s recovered pretty much everything lost at that point. And so now we’re at this point where we really have to see what’s next. What’s going to continue to propel this? And I would caution people that they really need to look at your portfolio and don’t just rely on what’s worked in the past six months or nine months or a year. There’s other things out there.

And the market’s going to get a little more, let’s call it specific or choosy as we go forward here because the economy, at some point, the sixth celebration is going to slow down a bit. And I’m not saying it’s going to go the other direction, but it’s going to slow down because the balance has been so dramatic as things have opened up. Once we’re fully opened up and things are functioning again, then it’s going to be a question of, okay, well, which industries are going to do well? Which companies are going to do well? We still have companies struggling. We still have people struggling and we still have prices going up. So, they can’t hand out checks forever.

Trey Ware:                         So, what do you tell clients as far as that is concerned? When you say, “look at your portfolio,” are there certain areas, certain corporations or certain sectors of business that you think that people should be looking at or be interested in?

Karl Eggerss:                      Yeah, no, it’s a good question. Because clearly the things that worked last year were the closed economy trade, right? In other words, software, technology. Those things did extremely well. They earned [crosstalk 00:01:57].

Trey Ware:                         Amazon.

Karl Eggerss:                      Amazon. Exactly. It made sense, but here we are now, and you’re starting to see airlines come back, cruise lines come back. And I would just say look for the companies that if you’re buying individual companies, maybe most people are not, but if you are, look for the ones that have not been as good the last several months and are just now starting. They’re the cheaper companies. And a lot of people don’t understand what’s in their mutual funds. Look inside your 401k and really see how much exposure do I have to technology, for example. Do I own any commodities? You and I have talked about prices going up over the last couple of months here, has been pretty dramatic. There are ways inside your 401k, inside your mutual funds, to actually own a piece of those things in a fairly safe manner because it’s diversified. So that’s what I mean by looking at what’s in your portfolio. The things that worked in April, May and June last year are not the same things working this year.

Trey Ware:                         Let me ask you an overall question and quickly here. And I don’t mean to throw you a curve ball, but do you know what Amazon is at approximately? Are they still three grand a share or something like that? I don’t mean to throw you a curve ball.

Karl Eggerss:                      That’s what’s crazy. Yeah, Amazon has clearly pulled back a little bit. A lot of these companies have. Amazon’s about $3,200.

Trey Ware:                         See, and here’s my point. I just wanted to make a point out of that real quick, is that when they started, I remember passing on it because Bezos was having ups and downs and all that, when they were getting started and I passed on it. You and I wouldn’t be talking had I not passed on it. I would be on a beach somewhere enjoying the sunshine. But right now, I mean, they’re talking a lot about the new economy of electric vehicles and all that. Everybody’s always searching for the next Amazon is what I’m saying.

Karl Eggerss:                      No, that’s true. And here’s the thing about that, Trey, it’s a great point. A lot of these businesses are going to be successful that are in their infancy. No question about it. However, typically their stocks will fall 80 or 90% before you get to that point. Amazon did. They fell about 90% back in the year 2000, if you remember.

Trey Ware:                         Oh, I remember.

Karl Eggerss:                      It was all about stay in power. And if it’s a good business, you’re going to have to ride those ups and downs. You don’t get the extra reward without taking the extra risk, for sure.

Trey Ware:          Yeah. Thank you, Karl. Appreciate it. That’s Karl Eggerss with creatingricherlives.com.

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