8Apr

The 10-Year Anniversary of the Bull Market

It was a meteoric ascent, with a few blips along the way. That may sound like a dramatic way to express the stock market’s rally of the past 10 years, but there are any number of adjectives that could be substituted for “meteoric.” The truth is that if someone had invested in an index fund tracking a broader representation of the equities market during that time period; March 9, 2009 to March 9, 2019, would have more than tripled their money.

The S & P 500 was up 313 percent during this time period.

Back in 2009, the market had bottomed out. This was post-financial crisis and it was a rough time for the market. The growth from that day forward has been a good period for the market and equity investors. To get more than a 300 percent gain on your money is not something that happens every day or during any decade. That is outstanding performance.

A hundred thousand dollars invested in March of 2009, could be worth over $300,000 today. The S & P 500 averaged nearly an 18 percent annual return during that time period. That is a substantial premium over its average annual return going back many decades.

This should also illustrate the futility of market timing. How many investors were ready to dive headlong into the market on March 9, 2009? Many were still licking their wounds. After all, the S & P 500 had hit a high in October of 2007 and then dropped more than 50 percent.

Recent Performance

This past December, and the rest of the fourth quarter of 2018, saw the S & P 500 drop by 13.5 percent. Some other blips in the rally occurred because of the Chinese economy and decisions made by the Federal Reserve. These events left some observers with the notion that the rally had ended and a bear market was upon us. That turned out to be a short-lived concern.

For much of the last 10 years, interest rates have been near zero, and investors seeking any level of return have chosen to go with equities. Although many continued to choose safe havens after the recession, many institutional investors sought higher returns in the stock market.

Today, there is slowing economic activity in Europe and in China. There is the geopolitical event known as Brexit causing some uncertainty about the trade and economic impact of the British exit from the European Union (EU).

Despite these things, domestic investor mood is good, corporate earnings remain strong and unemployment remains low. Will the long-running bull market see year 11?

That would require that no geo-political events arise and that the Fed remains sensitive to their impact on market movements. Since January, the S & P 500 Index has been on a mostly upward trajectory with some volatility thrown in for good measure. Investors can only hope.


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