Market Update

Market Review – Every Rose Has Its Thorn

By March 6, 2024No Comments

Every Rose Has Its Thorn

The Cautionary Tale of Valuation

Key Observations

  • Most risk assets advanced in February as optimism remains that the no-show recession of 2023 continues to fade further into the rear-view mirror. As a result, fixed income investors have also tempered the expectations around rate cuts and longer duration assets underperformed.
  • For the first time in 34 years the Japanese index, Nikkei 225, hit a new all-time high. The nearly 3.5-decade comeback is instructive of how to think about risk and valuations.
  • The Russia/Ukraine conflict entered its third year, and with hindsight, demonstrates two important macro trends of a multi-polar world and some newfound resiliency for Europe as it has waned off its reliance of Russian natural gas.

 Market Recap

Stocks advance in February with indexes like the S&P 500 and the NASDAQ hitting new highs. While a new high for an index is not a new thing, in fact it happens quite regularly and often without material consequence, there was a recent new high that is worth reflecting on. The Japanese equity index (the Nikkei 225) hit a new all-time high for the first time since 1989! We’ll do the math for you: that’s 34 years. For some pop culture points of reference, the last time the Nikkei was at these levels Poison’s Every Rose Has Its Thorn was the number one song in the U.S., Nintendo launched the Gameboy and the Berlin Wall fell marking the end of the cold war. Why it took this long to come back is an import investment lesson. In a word, valuation.


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