A dualistic economy with a dualistic stock market is underway in what could be the transformation of the century.
The Pandemic Great lockdown is the firing gun that has set off the fourth revolution, the digitalization of everything, the build back better ideology of reducing human carbon footprint on the globe.
A two-tier economy with a dualistic stock market is emerging
To view the entire stock market as being in a bubble is to be oblivious to the transformation underway and having an achromatic vision of stock prices.
“A two-tier economy with a dualistic stock market is emerging”
This dualistic market is littered with potential investor black holes and phenomenal opportunities
In the wake of the pandemic, great lockdowns the central banks have implemented unprecedented monetary easing policy. To give you some idea of the extent of the situation global money supply has exploded by $20 trillion in 2020, and the world’s central bank by default, the Federal Reserve, continues to inject $120BN in liquidity every month.
So, the economy is in transition, the Fourth Revolution is changing the way society lives, works, and relates to each other. These advances are merging the physical, digital, and biological worlds in ways that create both huge promise and potential peril.
The Fourth Revolution, a paradigm shift, is creating a dualistic economy with a dualistic market
So profound could be this change that humans could merge with the internet of things. The smartphone has already become an external minds-eye. Big data can almost predict what you are thinking and where you are likely to be sometime in the future.
“the Fourth Revolution is changing the way society lives”
Companies experiencing a boom in this dualistic economy and dualistic stock market are the fourth revolution stocks, which include blockchain technologies, electric vehicles EV investments
There is also a likelihood that EVs could become automated.
The winners of this dualistic stock market are driven by the fundamentals, which include macro trends
A global shortage of semiconductor chips and the increasing price of strategic metals underscores a sector in its infancy with exponential growth.
So, market-specific technology stocks may not be in a bubble, bearing in mind that their stock price reflects exponential economic growth in fourth revolution technologies, driven by a change in public policy.
Put simply the global push to reducing carbon emissions means we are at the dawn of EV investing as electrification of mass transport takes off. Moreover, the minimum wage is likely to accelerate demand for automation technologies. So, investors with a long-term investment horizon could find long term investment opportunities in these growth stocks, despite the current valuation.
“Fourth revolution technology is disruptive, hence a two-tier economy with a dualistic stock market” – Win Investing
Tech companies offering cybersecurity are likely to be winners of this dualistic stock market
As more human activity is conducted in the digital world, whether it be in banking, Fintech, or cloud computing with the internet of things tech companies offering cybersecurity will most likely see their revenue grow.
Fourth revolution technology is disruptive, hence a two-tier economy with a dualistic stock market
High Street retail, commercial real estate, and business travel could be the worst hit sectors as consumer buying habits move online and businesses conduct conference meetings using online platforms.
So, with over 20 trillion dollars of newly minted currency sloshing around in the financial sector, bonds are overbought and provide dismal yields. Moreover, monetary inflation makes the promise to receive a sum of money on the bond maturity less attractive, and deposit rates at banks are near to zero or negative in some cases.
In other words, the central banks have created a mountain of cash and virtually nowhere to go
The opportunity cost of investing in risky assets, virtually zero interest at the bank and dismal bond yields have created a spirit of forced optimism.
But this could also be false optimism, bearing in mind that the 20 trillion dollars increase in the money supply in 2020 has created the bubble of everything.
So, in this hyper financialized environment means that fundamentals, the price-earnings ratio is out of whack. Perhaps that is why investors have driven some tech stocks to high valuations is due to the future earning potential of the company that investors are buying.
“there are even rumors that banks are investing in cryptocurrencies” – Win Investing
Another group of investors believes that the best way to escape the disruption of a dualistic stock market and massive central bank currency creation is to exit fiat currency altogether
They argue that the bubble is in the money supply so to protect their wealth from currency debasement they seek sanctuary in precious metals and even cryptocurrencies.
The latter, cryptocurrencies continue to go higher despite the regulators warning to investors not to invest in cryptocurrencies unless they are prepared to lose all their investment.
What’s more there are even rumors that banks are investing in cryptocurrencies.
What are we supposed to make of this? So, could a bank run be coming soon?
Here is some food for thought, what if the virus mutates, thereby making vaccines ineffective, then would this dualistic stock market merge into a historic bear market
Perhaps if you are long-term investors any sharp sell-off, or even a stock market crash is irrelevant. Think about investor who bought Amazon stocks in 1997, for $18 per share.1. His modest $5,000 invested on that day and price would be worth more than $6 million as of May 2020. During that time Investor B probably heard more than half a dozen times that a stock market crash is coming.