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Blending Life, Wealth, Work & What's Next
August 23, 2018

Bull Market History

by Jared Jones

Today marks a historic day for financial markets. Wednesday, August 22nd, 2018 is the 3,453rd day of the bull market that began in the ashes of the 2008-2009 financial crisis on March 9th, 2009. This day marks the longest running bull market ever.

Investors shouldn’t necessarily be concerned about the length of time a bull market as much as the percentage increase. This market has gone up a lot – like, really a lot. Since the beginning of the bull-market we have seen the S&P 500® increase nearly 320%. This is great news but is still a long way off from the record for percentage increase of a bull market which came in the bull market following World War 2.

You might see that statistic and wonder why my investments aren’t up that much?! The answer is, if you are a client of OWM, you are broadly diversified. We feel very strongly that while the S&P 500® has seen tremendous growth over the past 3,453 days it is important to cover all your bases as an investor. Below is a graphic of all the asset class returns from year to year since 2008. and you can see they bounce all over the place. For this reason, we believe that is important to take a multitude of factors, including your risk tolerance and capacity, your timeline for cash needs, and existing assets into consideration when crafting a portfolio specific to you and your goals.

If you were to measure your returns over the past 10+ years, they would actually include the substantial drop everyone felt during the financial crisis. To experience the highest returns you would have had to invest at the absolute bottom of the market in 2009. This would’ve taken some extreme internal fortitude (or a crystal ball) to invest when investor sentiment and confidence was at an all-time low. The key is not to time the markets but to remain invested through the ups and downs when you can afford to, and that’s why we utilize a goals-based approach in our investment management strategy. And it’s easy to say, “why didn’t we just invest in the S&P 500® since 2009?” The reality is that most investors are certainly comfortable with the upside, but not so much with the downside.

The other point to note is that the market hasn’t been consistently on the rise over the past 9 years. There have been some years with very small, or even slightly negative returns. James Mackintosh, in his article published in the Wall Street Journal today, outlined how close the S&P 500® came to ending its bull market run back in 2011.

A bear market is defined as a drop of 20% from its last peak. In 2011, the S&P 500® narrowly escaped falling into a bear market when it fell 19.4% from its peak earlier in the year. Other benchmarks like the Russell 2000® fell far greater than 20% - hurt by its larger holding of small cap companies.

Any way you measure this bull-market run, it has been phenomenal. While the future is uncertain and questions of how much room the bull market has left to run remain, we all can take part today in enjoying this historic moment.

This blog post is provided by Omega Wealth Management, LLC (OWM) for educational purposes only and is not meant to be investment advice. Non-clients of OWM should consult with their financial advisors for more information. This blog post represents an assessment of the market at a specific point in time, and is not intended to be a forecast of future events or a guarantee of future results. Past performance is no guarantee of future results.

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