Crowning a New Champion - August 27, 2018

It was widely reported last week that the current bull market, which began March 2009, took the title as the longest-running bull market on record. On Wednesday, the broad-based S&P 500 Index3 extended its run to 3,453 calendar days (CNBC), taking the crown from the long-running bull market of the 1990s.

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Bull markets are generally measured from the lowest point in a cycle to the peak (the closing level of the index, not intraday). The peak, or closing high, can only be defined in hindsight, when the market has declined by at least 20% from its prior peak. That decline of 20% is widely considered to be a bear market.

In the depths of the Great Recession, the S&P 500 Index bottomed on March 9, 2009 at 676.53 (data provided by St. Louis Federal Reserve).

From there, it began its long climb to Friday’s close of 2,874.69, a record that surpassed the prior January 26 high by 1.82 points (MarketWatch). I guess if we’re splitting hairs, Friday is the day when the current run cemented its title as the longest.

But, the current bull market has not taken the title of best performer. That honor still resides with the period between October 1990 – March 2000. It’s trough-to-peak advance: 417% vs 325% in the current cycle (St. Louis Federal Reserve).

Bullish factors overcome headwinds

Powerful forces have supported shares over the last nine years. An expanding economy, rising and record corporate profits (Thomson Reuters), and low interest rates have played the dominate role.

Of course, there have been times when we experienced short-lived pullbacks. Short-term investors sometimes turn their attention to unsettling headlines, creating short-term volatility.

Woes in Europe, including Greece, Italy, Spain and the U.K.’s Brexit vote put up hurdles for the bulls. Worries about China, the collapse in oil prices, the downgrade of U.S. debt, and trade tensions all created temporary roadblocks.

Trade tensions haven’t dissipated, and European financial concerns are simmering below the surface, but none of the issues have forced a downturn in the U.S. economy. When cooler heads have prevailed, solid U.S. economic fundamentals have reasserted their influence over investors.

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The current bull market won’t last forever. It will be replaced by a bear market. We intuitively understand that. And, if over 200 years of history can be used as a guide, the next bear market will be replaced by a new bull market.

Looking ahead, we should be careful about complacency. It’s always important to maintain the right balance of stock and non-stock assets in your portfolio so you may continue to advance toward your financial goals.