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What is the future of the Nasdaq after last week correction?

Jan 27, 2022

Redacción Mapfre

Many of the high-flying companies that did so well in 2021 (and that have sharply reversed course thus far in 2022) were the favorites of the Robinhood crowd. The popular press often suggests that this new class of young investors who have entered the market should positively affect stocks’ long-term trajectory, bringing to mind similar stories written about day traders in the years prior to the dotcom collapse.

However, when the bubble eventually burst, those day traders sustained such large losses that they exited the market completely and, in many cases, did not return for many years. With a good deal of the high-flyers having already lost 50% or more of their value, we’ll be interested to see whether this new class of investor will leave the market in a similar fashion.

As of January 20, 2021, the S&P 500 was selling for 19.9x earnings (fwd.) versus 19.2x at its February 19, 2020, pre-COVID-19 peak and 13.3x at its March 23, 2020, pandemic low. Since the March 23 bottom, the S&P 500 has gained ~100%. By most traditional valuation measures, the S&P 500 is historically overvalued, yet value shares have not been this cheap relative to growth shares since the dotcom bubble (although they are not particularly cheap compared with their own long-term average).

We continue to believe that value will outperform growth in the medium to long-term, not only on a relative basis, but also—and much more important—by producing a positive absolute return.

Jonathan Boyar, CEO at Boyar Value Group

High volatility in stock markets: why it happens and how to act

In recent weeks, international markets have faced their most challenging period since 2020. In a situation marked by surging volatility, emotions like fear take center stage in the minds of many investors, and market movements shift from linear to exponential. Such situations, although not frequent, do tend to recur periodically, and it’s important not to get swept up in the negative atmosphere or act impulsively with a short-term mindset, as the experts at MAPFRE remind us.

The dollar's hegemony under scrutiny

The US dollar’s role as the world’s reserve currency, historically underpinned by institutional credibility, financial depth, and trade dominance, is now facing mounting structural challenges that go beyond short-term economic fluctuations.

The tariff war shakes the global economy and casts doubt on U.S. debt

The tariffs are a problem that’s marking a major shift in the economic relationships we've built and developed over the past few decades. The U.S. President is using them as a tool to bring manufacturing back home and, in turn, boost government revenue through both direct and indirect taxation. But the ends don't always justify the means, and in pursuing these goals, the U.S. is now facing slower economic growth and rising inflation.