The current Bull Market,
which officially began March 9, 2009, turned nine years old last Friday. The S&P 500, which closed at just over 676 on that day, has since advanced over four-fold (see nearby chart) to roughly 2800.It was months after that March in ’09 that investors and pundits alike realized that the markets had made a bottom and, more importantly, were advancing. With the Dow Jones near its low of 6,600 or so, the Wall Street Journal published an article stating the case for Dow 5,000. The Journal was not alone, not by far. Nobody rings a bell when it is time to ‘get in’.
A lot has happened since the birth of this bull. In the last eight years, we’ve seen the launch of the first iPad, the rather gigantic baby steps of Uber and AirBnB (see: Business Insider - The 7 most valuable startups in the US), and LeBron James making a decision to leave Cleveland only to return a few years later (but not before winning two championships with Miami). Hydraulic fracturing, or “fracking”, the process by which energy companies extract oil and gas from shale rock, has put the US on a path to energy independence, the ‘internet of things’ has made possible, among other things, driverless cars and Amazon is no longer first thought of as a river in South America.
A lot has probably happened in your life as well. What made sense for you as an investor eight years ago may be a little outdated, like using the post office instead of social media to send a message. Take a look at the nearby graph. For two years, the market made new high after new high, then, in February, investors concerned about the possible return of inflation dropped stock prices by 10%. Since then, the market has tried to get back to its January levels but has been hindered by talk of trade interruptions. For the first time in a while, stocks seemed ‘risky’ again.
How did that make you feel?
This bull, like all others, will end someday (though no one will ring a bell at its end), but it doesn’t seem to be today. Earnings growth expectations continue to improve, business optimism continues to remain high, and the majority of US-based companies should stand to benefit from a cut to their corporate tax rate over the next couple of years. Still, after such a powerful advance, and the recent jitters, it just seems like a good idea to pause and reflect on this ninth birthday of the Bull, to take the chance to bring your portfolio in for a checkup, maybe a tune-up. Is the percentage you have invested in equities still in line with what you want your money to accomplish? Has anything happened to change your appetite for the ‘riskiness’ of equities? Would some counterbalance in your portfolio make any sense? What is your relevant time horizon now?
For a year or so after the market bottom, when they least needed it, investors clamored for possible protection that would shelter them from the ravages of the next bad stock market. Nine years later, closer to a point when such protection might actually make sense, there is little interest. It is a good idea to buy straw hats in the winter.
We look forward to visiting with you over the coming months, putting your portfolio on the lift, and doing a full inspection.