Record Bull MarketSubmitted by Trott Brook Financial on August 29th, 2018
It’s official, we’re currently amidst the longest bull market in US history (as measured by the S&P500 at least). According to data from JP Morgan, the average S&P500 bull market since the 1920s has lasted about 55 months. The current rally is now in its 113th month and just passed the previous record which ran from October 1990 to March of 2000.
Should investors be nervous?
One legendary investor I follow very closely, Howard Marks, recently mentioned that since the financial crisis, he’s been getting asked, “What inning are we in?” Marks previously issued what turned out to be prescient warnings about over heated markets leading up to the tech bust in 2000 and housing meltdown in 2008. He’s recently been saying, “It feels like we’re in the 8th inning.” But he reminds investors that you can’t confuse the rules of baseball with markets. There certainly seems to be indications that we’re in “the later innings,” but no one knows how many innings there are.
Marks’ comments struck a chord with me. His point was, no one knows how long these streaks will last. Every cycle is different. Therefore, as much interest as some of these statistics generate in the media, it is very dangerous to take direct ques from them.
However, if there’s one thing I think virtually all investors would be well advised to do as the markets touch all-time highs, its assessing your overall market exposure and appetite for risk. I remind our clients frequently that since the year 2000, US stocks have broadly declined by 50% twice! The current cycle doesn’t have to end with a huge bust, but a bear market is generally defined as a broad decline of at least 20%.
That said, now, when everything is moving along positively, is the time to be sure you are comfortable with your portfolio mix. It’s very easy, and often times dangerous, to look back and wish you were positioned differently. The fact is, it’s tomorrow that matters.
Most people don’t even realize how much or what type of market risk they have exposure to until “stuff” hits the fan. With your investment portfolio likely looking as good as it has in ten years, take some time now to ensure you’re positioned in a way that is consistent with your goals and will allow you to sleep well when conditions become less favorable.
Trott Brook Financial, LLC (“Trott Brook”) is a registered investment advisor. This market commentary is provided for educational and informational purposes only and is not to be considered investment advice. Investment advice is rendered on an individualized basis through Trott Brook. Advisory Persons of Trott Brook may also offer securities offered through LaSalle Street Securities, LLC (“LaSalle”), a FINRA/SIPC member broker/dealer. Trott Brook and LaSalle are unaffiliated separate legal entities.