It Pays to Be an Optimist By Brett Eversole In 1792, only 16 years after the U.S. declared its independence, 24 stockbrokers signed the Buttonwood Agreement at 68 Wall Street. It was named for the buttonwood tree where the earliest stock trading took place – and where the financial district of Manhattan sits today. At the time, trading was growing. And too many brokers were trying to meet under the tree to do business. The Buttonwood Agreement established trading rules that allowed the transactions to move to nearby offices. More important, it served as the founding document for what would become the New York Stock Exchange ("NYSE"). I had the honor of ringing the bell at the NYSE last month. So today, I'll share what I learned from the experience. The main takeaway is simple, yet important... When it comes to investing, it pays to be an optimist. You might not think about it very much, but the NYSE – and the capital formation it makes possible – is a big reason why the U.S. dominates the global stage. Companies from all over the world come here to raise capital. And with such a large, highly liquid market, that won't change anytime soon. The NYSE remains the largest exchange in the world today. And its only real competitor is its U.S. peer, the Nasdaq. Knowing the NYSE's history, I jumped at the opportunity to visit the spot where it all began in America... The invitation came from KraneShares – an exchange-traded fund ("ETF") company. I've gotten to know its team well over the years. The firm's first ETF turned 10 years old last year, so KraneShares hosted a bell ringing to mark the occasion. Here's a shot of me (on the far left) with the KraneShares team closing the NYSE on December 20... This wasn't my first time ringing the bell at the NYSE (KraneShares invited me in 2018 as well). But seeing the headquarters in person is new and surprising each time – especially when you consider its legacy. Open outcry on the trading floor is long gone. That has been replaced by computers today... And the bell-ringing podium now sits above the modern CNBC studio. The filming buzz is a lot livelier than the actual trading area. But you still see folks wearing trading jackets, hearkening back to the olden days. Here's a shot of me with Jon Krane (founder and CEO) and Brendan Ahern (CIO) overlooking the calm, modernized trading floor... Thanks to Jon and Brendan for inviting me. They've built an incredible business over the past decade, creating innovative products for investors. I look forward to seeing what they do over the next 10 years. The NYSE headquarters might be mostly ceremonial these days. But the power of the U.S. stock market is still crucial to the economic strength we enjoy. Capital formation breeds growth... And no one in the world does it better than the U.S. Warren Buffett has written about this time and time again. In his February 2021 letter to Berkshire Hathaway investors – after a year of pandemic-driven economic challenges – he made a powerful statement... Despite some severe interruptions, our country's economic progress has been breathtaking... Our unwavering conclusion: Never bet against America. He was right. The struggles of 2020 were unprecedented... Yet the economy didn't crash and burn. And it has held up better than anyone expected in the years since, despite the doom-and-gloom predictions. Now, the S&P 500 Index has hit all-time highs once again. And the market has more than doubled from the depths of the 2020 crash. The specifics may change... But the drive toward prosperity remains the same. And when it comes to the American experiment, the progress is impossible to argue against. This attitude is why I consider myself a long-term optimist, both in life and in investing. And even after an incredible year in 2023, we should expect the good times to continue. I don't say that for a specific fundamental reason or for a positive wrinkle I see in the U.S. economy. It's broader than that... There's no certainty that tomorrow will be better than today. But it's near certain that five years from now will be better than today. And the chances get even better a decade from now. That's the story of American prosperity and American investment markets. Progress always wins over time. As long as you maintain a long-term outlook, that optimism will pay off... and your portfolio stands to reap the rewards. Good investing, Brett Eversole Further Reading U.S. stocks had an amazing rally in the final two months of 2023. The market returned a double-digit gain. And according to history, the gains aren't over. Based on that year-end surge, it's likely we'll see another strong year for the market... Learn more here. Utility companies offer services that folks will always need. That's why they tend to be safe investments in times of uncertainty. Right now, one indicator tells us investors aren't buying these "safe haven" stocks. And that's a bullish sign for the market... Read more here. |
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