Since March of 2009 we have experienced one heck of a bull market. There have been A LOT of ups and downs in between, but still, it has been one heck of a bull market…or at least a long bull market. So, the question on every investor’s mind is, undoubtedly, Is there more to come or is it time to cash in my chips?
The market has well surpassed the length of any other historical market in our country; however, it has not surpassed the size. The bull market of the 1990’s ended with a 417 percent increase in the S&P 500. The current bull market is up well over 300 percent currently, but not 400 percent. Most markets pop because something grows too much too fast. This simply has not been the case over the past ten years. It has been slow, steady and even downright boring at times. Furthermore, a bear market is usually defined as having a correction of 20 percent or more. In 2011, the S&P 500 retracted 19.4 percent and in 2018 it began a correction that ultimately landed at 19.8 percent. The arguable conclusion is that this was just the S&P 500, which is only five hundred stocks. Many indices surpassed the 20 percent benchmark. So, is it really a ten-year bull market? And, really, does it matter?
No. The size or length of the bull market simply does not matter. Logic would say that slow and steady growth would avoid bubbles and level out the roller-coaster effect. But really, all that matters is price in relation to valuations, supply and demand, other economic factors and trends. Listen to this week’s podcast to learn more about where these factors are.
It is a double-edged sword in the market. Investors are nervous…about tariffs, politics and the length of this bull market. On the flip side, you’re hearing the rumblings reminiscent of the 90’s—if you can’t make double digit returns, I don’t need you.
I read an article back in 2014 titled “Portfolio Construction is Boring, But Advisors Need to Read This Anyway.” The first thing in the article is a question: What’s changed over the past year in constructing the right portfolio for our clients? The answer? Absolutely nothing. 1. The same is true today. Supply and demand is still supply and demand. You build a portfolio on this.
You have often heard us say that we are risk managers before we are portfolio managers. Your risk has to be right or nothing will work. The next bear market will come. Will you be able to stomach it? And equally important, will you be able to stomach not making a one hundred percent return on your money if this bull market gets there?
Long-term consistency trumps short-term intensity. —Bruce Lee. This goes both ways. Whether you are fearful or greedy right now, remember to stay disciplined. Know your long-term plan and stay consistent.
- Roth, Allan S. Financial Planning. April 2014.