Benjamin Cowen recently shared his analysis on the S&P 500, uncovering critical insights and comparisons between past and current market behaviors. The CoinSpeech team has collected the most important takeaways from his recent appearance. You can find Benjamin Cowen’s new video below.
Comparing Drawdowns: Late 2023 vs. 2024
Amongst Cowen’s most valuable observations, he highlights the differences between the drawdowns in late 2023 and early 2024. He notes, “In late 2023, the S&P 500 experienced a more severe correction which also corresponded to the 10-year yield breaking out to new highs.” This impacted risk assets negatively, showcasing a correlation between the S&P 500’s performance and the yield curve.
The Impact of the Yield Curve
Cowen underscores the importance of the long end of the yield curve, explaining, “As long yield goes up, it puts downward pressure on risk assets,” reflecting its significant role in market corrections. He observes that the 10-year yield’s behavior will be crucial in predicting future market trends.
The Case for Index Funds
Reiterating his long-standing investment philosophy, Cowen emphasizes the benefits of index funds, saying, “Index funds tend to outperform even what you’ll find a lot of hedge funds trying to do.” He attributes this outperformance to the diversified nature of index funds, which reduce the risk associated with picking individual stocks.
Seasonality and Market Timing
Regarding market seasonality, Cowen provides a nuanced view: “Seasonality is something that plays out maybe like 60 to 70% of the time.” Notably, he points out that the S&P 500 is currently defying typical election year patterns by being near historical highs instead of struggling as it usually would around this time of year.
Key Stocks: Nvidia vs. Tesla
Exploring individual stocks, Cowen discusses the contrasting performances of Nvidia and Tesla. He mentions, “Nvidia’s recent explosive move to the upside has been remarkable,” highlighting its dominance compared to Tesla, which has remained closer to its lows. This discrepancy illustrates the challenges of stock picking versus broader index investing.
Watch the 10-Year Yield
Emphasizing the significance of upcoming economic indicators, Cowen advises, “Keep an eye on the 10-year yield”; its movement could provide clues about the market’s direction. The results of the forthcoming jobs report could significantly influence the 10-year yield and, by extension, the S&P 500.
Below is the embed of Benjamin Cowen’s new video: