Monday, July 8, 2019

From the Desk of David Burks – The long (long), strong—and underappreciated—US bull market

David Burks
Author position
Sr. Vice President | Equity Income Analyst

From the Desk of David Burks

Senior Vice President and Equity Income Analyst David Burks has been with Hilliard Lyons, A Baird Company, since 1983. David has been nationally recognized for his stock recommendations eleven times: seven times by Thomson Reuters and four by The Wall Street Journal. David has appeared regularly on CNBC over the years.

The long (long), strong—and underappreciated US bull market

The longest bull market in US history lives on. The S&P 500 closed at a new record high on July 3. This bull market has been extraordinary both in terms of time and magnitude. Beginning in March of 2009, it has now lasted over ten years and counting. While not the single largest advance on a percentage basis, the S&P 500 has still risen a remarkable 340% since this bull market began. Yet it seems many investors have not fully appreciated what a tremendous period we have enjoyed all these years. While people tend to look back nostalgically at the “good old days,” these have been the “good old days” for some years now. Let’s not forget that.

How Strong Has This Bull Market Been? Let Us Count the … Days

In this table we list the number of days each year over the past dozen years in which the S&P 500 has set a new record high. During the severe 2007-2009 bear market the S&P fell by nearly 50%. As one might imagine, the sell-off was so sharp that there were no new market highs in 2010, 2011, and 2012, despite the market’s broad recovery then. In fact, there was a long 5½ year gap between the old October 2007 market high and the next one in April 2013.

Yet look what has happened since then. In 2013, there were 45 days in which the S&P set new record highs. This was followed by an even larger number of records set in 2014. The S&P 500 has now established new record highs in seven consecutive years. During this stretch there have been a staggering 215 new all-time highs. It is historically quite unusual to see the stock market perform so well for so long.

Many Happy Returns…

While the market’s bottom in March of 2009 may have represented an historic buying opportunity, an investor did not have to invest then to enjoy large gains since. Perhaps the most important thing an investor could have done at the time was to maintain their equity positions. No easy feat after such a lengthy, severe bear market.

But what kinds of returns were available after the market rebounded? In this example, we look at the total returns from the S&P 500 each year on the anniversary of the market’s bottom. Of course, the longer the timeframe, the higher the return. Yet there have been corrections, and major ones, including last fall. It has not been a straight upward move. Interestingly, even after four full years from the market’s bottom, the S&P 500 doubled. This table further underscores what an exemplary period this been for stocks. It also reinforces the power of long-term investing.

Final Thoughts

We certainly are not implying the current bull market has years to go. Every bull market has both a beginning and an end. This one will as well. Regardless, we believe investors may want to temper their expectations for future returns given the market’s impressive prolonged strength. New market highs might also provide an opportunity to raise cash or rebalance a portfolio.

We think investors should be grateful for this remarkable performance by the stock market over such a long time period. A ten year bull market is a rare event and not something to be taken for granted. Sure, not all stocks have fared well, but many investors have enjoyed significant gains. Even if these do not feel like the “good old days,” in time, they may.




Each client’s investment needs, risk tolerance, and goals are different. This newsletter is not meant to be advice for any specific investor. Nothing in it should be construed as an offer to sell, or a solicitation of an offer to buy, any securities. This should not be used as the sole basis for an investment decision. Any opinions or estimates are subject to change without notice. For information about how any of this information applies to your personal financial situation, please contact your Wealth Advisor.

Past performance is not a guarantee of future results.

Although the information provided to you in this newsletter was obtained or compiled from sources that we believe are reliable, J.J.B. Hilliard, W.L. Lyons, LLC, A Baird Company, cannot, and does not, guarantee that the information or data is accurate, timely, valid, or complete.

All investing involves risk, including the possible loss of principal. You should carefully consider investment objectives, risks, charges, and expenses of any investment before investing. Diversification and asset allocation do not guarantee a profit or guarantee against a loss. Note: It is not possible to invest directly in an index.

Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments. The bond market is also volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect can be more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks.