As we move into the second half of 2024, we marvel at a great start to the year. The stock market indices continued their march to new highs for the last six months with a few missteps here and there. This has been supported by good economic data, including strong employment and GDP numbers. However, personally, there is a growing sense of Déjà vu. Let me explain.

I started full time in this business in August of 1999. My preceding job was at a consulting firm where I was busy doing computer programming. For those of you who don’t remember, 1999 was the height of the dot.com boom. Coming out of technology myself, it is safe to say I was a “True Believer” that the explosion of the internet was going to change everything. It’s safe to say I was right, but things didn’t exactly work out in the way I expected.

At that time, there was a pervasive belief that the Internet would bring with it an almost never-ending level of prosperity, and the typical business cycle of expansions and contractions was over. I attended presentations at conferences justifying the valuations of high flying “Cocktail Party” stocks. I distinctly remember sitting in a meeting and hearing the quote, “all you need to get a good return is a few technology stocks.” The overall consensus was that “it’s different this time.” Of course, that was wrong.

Once we made it through the potentially world ending event that was Y2k (kids, ask your parents), the business cycle came back with a vengeance. The next three years the S&P 500 index saw negative performance and high-flying technology stocks were laid low. Some have never reached their highs again - almost 24 years later. A few years later, in the late 2000s, I saw similar behavior in the real estate markets which culminated in the Global Financial Crisis.

Now, to be clear, I am NOT saying we are on the precipice of another financial crisis or a similar dot.com crash. However, I am starting to see some clear signs of what the great economist, John Maynard Keynes, described as “Animal Spirits,” or to put it in current terms, there is a lot of FOMO (parents, ask your kids) going on. I just got back from a conference in beautiful, Beaver Creek, Colorado and one of the presentations was on how the high-flying stocks of this year can continue. There is a lot of focus on just a few popular stocks right now that are seen as a “sure thing,” when we know there is no such thing. 

So, what are investors to do in times like these? My advice is three-fold. First, focus on your overall plan and remember investing is a long-term effort, not a sprint. Second, if you start hearing about stocks or other investments from people who don’t normally talk about stocks, it’s probably too late. Finally, these are great times to revisit your risk tolerance, and make sure that it fits in line with what you are comfortable with.

Please reach out to us with questions or concerns or if you’d like to discuss things further.

We appreciate your trust and confidence.

Coming attractions: Our next newsletter in October will be focused on the Election from an economic and markets point of view. If you have any questions you’d like to see answered please feel free to reach out to me!

Kevin P. Sullivan, CFA, CFP®, AIF

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Sullivan & Associates is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc., and Sullivan & Associates. Securities are offered through Raymond James Financial Services, Inc., member FINRA/SIPC.