Charting the Wild Financial Decade of Dow 36,000 and Crypto's $3 Trillion Market Cap (2024)

Key Points:

• The financial landscape has undergone significant changes over the past decade.
• The Dow Jones Industrial Average has surpassed the once-unthinkable 36,000 mark.
• Cryptocurrency has exploded in popularity, with a total market cap of $3 trillion.
• The UK’s departure from the European Union, known as Brexit, has created major economic shifts.
• The GameStop phenomenon has revolutionized the retail market.
• The COVID-19 pandemic has transformed the way we work and live.
• Despite the uncertainty, continuous learning and analysis in finance and investing remains crucial.

To mark the 10th anniversary of Enterprising Investor, we reflect on the significant themes in finance and investment over the past decade. The financial world has seen remarkable changes, making it hard to imagine how different things were just 10 years ago.

In 2011, the Dow Jones Industrial Average struggled to break out of the 11,000s range, still recovering from the 2008 financial crisis. The once-bold prediction of Dow 36,000 seemed ludicrous after the burst of the tech bubble. Inflation was not a major concern, thanks to near-zero interest rates, and deflation was even considered a greater worry.

At the time, cryptocurrency was still a futuristic concept, with Bitcoin being the only well-known digital currency. The idea that Bitcoin would surpass a $1 trillion market cap or reach a value of over $65,000 per coin would have raised eyebrows. The environmental impact of Bitcoin mining, matching the energy usage of entire countries, was unthinkable.

The term “Brexit” would have left people scratching their heads back then. The idea of the United Kingdom leaving the European Union was not seen as a realistic possibility. However, the UK’s messy divorce from the EU has now become a reality, fueling political trends worldwide.

GameStop, a mall store selling video games, had little indication of the retail revolution it would ignite. The company’s market cap skyrocketed to $15 billion, fueled by a revolt from retail investors in the meme stock phenomenon.

Lastly, the word “pandemic” would not have resonated with anyone in 2011. The scale and impact of a global outbreak like COVID-19 were incomprehensible, as previous outbreaks had been on a much smaller scale.

Fast forward to today, and the Dow has shattered the 36,000 ceiling. Inflation has surged to unfamiliar heights, fueled by unprecedented monetary stimulus. Cryptocurrency’s total market cap stands at a staggering $3 trillion, even though skeptics argue it has no intrinsic value. Brexit has become a reality, with the UK now navigating its new relationship with the EU. GameStop’s market cap has defied logic, and the effects of the meme stock revolution are likely to shape the market for years to come. The COVID-19 pandemic has transformed our lives and the nature of work.

Prediction: The Future Will Be Different

Looking back at the past 10 years, it is clear that forecasting the future in finance and investing is challenging. However, the process of analysis and continuous learning is invaluable. While not all forecasts yield attractive returns, the process itself builds skills and expertise that will benefit investors in the long run.

At Enterprising Investor, we have published numerous forecasts and perspectives over the past decade. Some have been remarkably accurate, while others have missed the mark. The key takeaway is that the process of analysis and research will ultimately lead to a better understanding of the markets and investment opportunities.

As we move forward, it is important to continue acquiring knowledge and skills, exploring new ideas, and staying informed about market developments. This approach will enable investors to navigate the ever-changing financial landscape and succeed in the world of finance and investing.

Selected Articles:

1. How to Read Financial News: Learn to optimize reading and distinguish narrative from noise in financial news.
2. Advice on How to Become a Research Analyst: Steps to improve your chances of getting hired as a research analyst.
3. How I Generate Investment Ideas: Insights into the process of generating investment ideas.
4. The Seven Kinds of Asset Owner Institutions: Exploration of the motivations and types of asset owners.
5. Seven Essential Steps in Portfolio Management: Seven steps to master for becoming a portfolio manager.
6. The Intangible Valuation Renaissance: Five Methods: Valuation techniques for intangible assets.
7. Work and Leadership: Going It Alone: Embracing self-leadership for personal and professional growth.
8. “Your Network Is Your Net Worth”: Seven Tips to Propel Your Career: Leveraging social capital for career advancement.
9. Howard Marks, CFA: Getting the Odds on Your Side: Managing risk and understanding market cycles.
10. Aswath Damodaran on Acquisitions: Just Say No: Examining the value destructive nature of acquisitions.
11. The NIFTY 50 No Longer Reflects the Indian Economy: Analyzing the contrasting trends of benchmark indices and GDP growth in India and the US.
12. The NMC Health Debacle: Four Red Flags?: Exploring the prediction models that could have anticipated NMC Health’s issues.
13. Roberto Campos Neto, CFA, on COVID-19, ESG, and an Inclusive Recovery: Insights from Central Bank of Brazil Governor Roberto Campos Neto on monetary policy response to the COVID-19 crisis.
14. Shareholder Value vs. Shareholder Welfare: Examining the responsibility of companies in maximizing value and welfare.
15. What Most Active vs. Passive Debates Miss: Considering the factors involved in the active vs. passive investment decision.
16. Redefining Fixed Income: Rethinking portfolio management and risk control in a changing fixed-income landscape.
17. Aging and Equities: Selling Stocks for the Long Term: Addressing the challenges of an aging population and its impact on stock markets.
18. Living with Risk: The COVID-19 Iceberg: Embracing risk and adapting to the challenges brought by the pandemic.

As we embark on the next decade, Enterprising Investor looks forward to providing more valuable insights and invites readers to join our community as subscribers and contributors.

All posts are the opinion of the author and should not be construed as investment advice. The views expressed do not necessarily reflect those of CFA Institute or the author’s employer.

Image credit: ©Getty Images / Sean Murphy

Professional Learning for CFA Institute Members

CFA Institute members can self-determine and self-report professional learning (PL) credits earned by using the online PL tracker. Subscribing to Enterprising Investor can contribute to professional learning credits.