Global Semiconductor Sales Signal A Recession In 6 Months

The type of negative situation I’m referring to is similar to the change Venezuela has experienced except on a global scale. Some say that if that occurred, everyone would be doing poorly, so there’s nothing you can do to avoid it.

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As you can see from the chart above, currently active investors make up 63.3% of the market and passive investors are 36.7%. 

By 2021, which is in only 2 years, passive investments will overtake active investments. Investing in stocks has become like a public utility where people put their money in and expect to get about 7% returns every year.

As you can see on the left-hand side of the chart, during the financial crisis less than 20% of investment in stocks was in passive funds. This is important because the next big crash will be the first one where passive dominates the investing landscape. 

I’m interested to see how many investors give up on the passive strategy and panic as stocks are crashing. Investors held up pretty well in Q4 2018, but that was a quick shock which ended as quickly as it came.

Global Semiconductor Sales - Amazing 10 Year Annualized Returns

Investing only in the S&P 500 isn’t a passive strategy. It seems great to many investors who aren’t professionals who follow global markets and are aware of historical trends. 

As you can see from the chart below, the past 10 years of returns were 16.7% per year. Those who are putting their money away hoping to get just 7% per year should be pleasantly surprised. Based on historical records, these returns won’t be beaten, but they can be sustained for a few years. 

Since the 2009 bottom was just lapped, it’s very safe to say the next 10 years won’t be as good as the 10 year period from March 2009 to March 2019.  

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Global Semiconductor Sales - Conclusion

The stock market ended its 3-day winning streak, but the losses from last week will likely be rescinded this week. 

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