Welcome to the longest bull market in US stock market history. From the bottom of the market during the Great Recession through, August 26, 2018, the S&P 500 has been on an amazing run. But, what does this really mean? And, does it matter? Let’s take a look.
First of all, some definitions. A bull market is a sustained period of rising prices. A bear market is the opposite: a sustained period of declining prices, usually of at least 20%. A market correction is a shorter-term phenomenon where prices drop more than 10%, but less than 20%. And, while there is no formal definition, it is generally accepted that a bull market starts at the end of the last bear market, and ends at the beginning of the next bear market.
Since 1930, bull markets have lasted an average of 97 months. Meanwhile, bear markets average about 18 months^. This average will vary based on who you talk to, but the important thing is that bull markets last much longer than bear markets.
So, let’s put this historic bull market in perspective. Over the last nine and a half years, the S&P 500 has increased 324% (price only)*. All without a 20% pullback. And, while this may seem like too far too fast, remember where we were coming from. The most recent bear market saw the index drop 57% (from 10/2007 to 3/2009)*. Which means 131% of this bull market was just recovering from the Great Recession.
It’s also important to note that during this record run, the S&P 500 has seen two stretches of over 18 months where it was virtually flat.** And, during the first stretch, the S&P 500 did drop about 19%. This is notable because it shows the market taking a breather. Occasionally, when a market corrects itself, it is because prices have outpaced earnings. A period of flat performance achieves the same “correcting” by letting corporate earnings catch up to stock prices.
Now that we’ve reached record territory in terms on length, many are wondering if this bull market’s days are numbered. Well, it’s important to note that no one can predict when a bull market will start or end. Short term market forecasting can be perilous. There have been many analysts warning that this market run was over five years ago (if not longer).
Also, there are differing interpretations of when a bull market starts and when it ends (and even what it is). Some observers believe that a bull market doesn’t start until the market fully recovers from the previous bear market (i.e. the bull market starts only when the old high has been reached). Others believe that using intraday highs and lows (instead of closing prices) means that this bull market only started in 2011.
Finally, there are many factors that determine the level of the stock market. Corporate earnings, interest rates, geopolitics just to name a few. And these are far more important than counting days. So remember, when investing, focus on your own situation and your own specific goals. And, as always, your best chance for success is to invest for the long term.
**2/2011 to 11/2012 & 3/2015 to 10/2016 (finance.yahoo.com)
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
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A Financial Advisor registered through CUSO Financial Services, L.P., Gavin has 25 years of experience as an advisor in the Puget Sound area.
“I believe every client is unique and deserving of a personalized financial plan that will help them reach their individual financial goals. Before I make any recommendations, I like to get to know my clients. By asking the right questions, and developing an honest, trusting relationship, I can really get a sense of what’s going to work best for them.”
Gavin graduated from the University of Washington with a BA in Business Administration and started his financial career with US Bank in the Investment Department. Prior to joining Verity in 2006, he spent eight years with Piper Jaffray.
So what is Gavin’s vision for his dream retirement?
“My dream retirement would be absolutely worry free: financially, emotionally, and in every aspect of life. My finances would be in order so expenses for travel, luxuries, and gifts for the kids, grandkids, and great-grandkids would be taken care of. My kids would be financially sound, so I would be confident in their prosperity. This would give me the freedom to travel and play and do whatever it is I want to do.”
When Gavin’s not working, he enjoys spending time with friends and family, watching Husky football and taking weekend trips around the Northwest.
Gavin is registered to transact securities business in the states of AZ, CA, CO, FL, HI, ID, IL, KS, MN, NV, NY, OR, UT, VA and WA.
*Non-deposit investment products and services are offered through CUSO Financial Services, LP (“CUSO Financial”) (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CUSO Financial. Verity Credit Union has contracted with CUSO Financial to make non-deposit investment products and services available to credit union members. Atria Wealth Solutions, Inc. (“Atria”) is not a broker-dealer or Registered Investment Advisor and does not provide advice. CUSO Financial is a subsidiary of Atria.
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