The gestalt of the 2020s is no different. SaaS (software as a service) businesses have unlocked a revolution of managerial choices and adjusted-book value accounting. SPACs have revolutionized the IPO process. Bitcoin has made gold look antiquated. Stock investing is as easy as buying or selling 500 stocks in the press of a button on your phone with confetti exploding in your eyes. While all these feel very new, we must, in a matter-of-fact way, recognize that all these things are coming among the lowest rates in the history of the bond markets and at the lowest real yields.

We believe these individual pieces should sound just like the pieces they are. Many investors blend these together and it produces the gestalt of the 2020s. We pray that prevailing interest rates don’t change too abruptly, causing economic damage to the myriad of these parts. We recognize that is a possible outcome. Looking forward a couple of decades, we could see quite a few of these blue-chip stocks produce poor returns and torment long-term holders. The torment from the gestalt of the 2020s could lead to stock market failure.

Cole Smead, CFA, is president of Smead Capital Management.

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