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It was just over 4 years ago that global stock markets were at one of their lowest points, figuratively and literally, in years. The global financial crisis had decimated economic growth, with the U.S. economy sinking at a 6% annual rate in the fourth quarter of 2008, corporate profits had seen their worst decline since the depression in the 1930’s and investor sentiment had reached its most extreme levels of pessimism. Worldwide, stocks were demolished, falling about 40% on average in 2008, less than eight years after the bursting of the ‘tech bubble’ had also lead to one of the worst bear markets in decades. Investors weren’t just ‘gun shy’, many were in shock! They had seen the last ten years of savings eroded and many were totally rethinking whatever retirement plans they may have had. As is typical in stock markets, though, it is ‘always darkest before the dawn’ and those conditions did end up giving rise to a recovery in stock prices of more than 100% since then. It didn’t hurt that central banks all over the world, particularly the U.S. Federal Reserve, basically ‘opened the spigots’ and provided massive levels of liquidity to fund this recovery, driving interest rates to their lowest level on record. Governments also went on a spending spree, with infrastructure programs all over the world breaking ground, and debt levels rising in the process. U.S. federal debt ballooned from about US$6 trillion to a projected level of almost US$15 trillion this year. Gold prices more than doubled along the way as investors worried about the continued depreciation of paper currencies everywhere.
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