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Investment Insights: The longest U.S. bull market? Sort of.

Wade Balliet
Posted by Wade Balliet
Investment Strategy

This weekly report presents insights from our Global Investment Management team.

The closing bells have been ringing louder and louder each day this week as U.S. stock markets near another record-breaking milestone.

Closeup of stock market screen with all green arrows pointing up next to specific percentages.News outlets have been clamoring that the S&P 500 achieved its longest bull market streak in history today, at right around nine-and-a-half years, returning a cumulative 416% from the low in 2009. U.S. stocks have been surprisingly resilient since the Great Recession when compared to their international brethren, despite the global synchronized recovery resulting in positive economic data in many economies around the world. MSCI data shows that over the same timeframe, international developed stocks and emerging market stocks returned 196% and 180%, respectively.

However, there may be some contention on which U.S. rally is really king. The widely believed previous record holder for the longest run in U.S. stocks began with the tech rally in 1990 through the dot-com crash in the early 2000s – a period one day less than the 3,453 days of our present bull market run. The key argument here is the loose definition of a bear or bull market. Traditionally, a peak-to-trough move of 20% or more is considered a bear market, and vice versa for a bull. The issue some investors are having is that the “bear market” in 1990 may have actually been a correction, since the S&P 500 declined just shy of the fairly informal 20% threshold. Technically, the start of the pre-2000 bull run was after a bear drop in 1987 that kicked off a 4,494-day run. While the streak U.S. stocks have experienced during this economic recovery has come a long way, the ’90s will be a tough act to follow.

The current bull market isn’t over yet. The S&P 500 could continue to climb ever higher, but it would take almost another three years without a meaningful downturn – a bear market – to match the financial market expansion of the ‘90s. While our team, along with most investors, would prefer that scenario, we believe the swan song may be on the horizon. We continue to look toward 2020 as a potential slowing point for the economic recovery, when there is a growing – but still mild – risk of recession, in our view. Typically, financial markets experience a reaction months before any economic slowdown is called. The Global Investment Management team continues to be proactive in our approach and has made valuable adjustments to our strategies to position them for the current environment.

Chart showing various market returns as of 8/21/18

Investing involves risk, including the possible loss of principal and fluctuation in value. Economic and market forecasts reflect subjective judgments and assumptions, and unexpected events may occur. Therefore, there can be no assurance that developments will transpire as forecasted. The information in this newsletter is for informational purposes only and is not intended to be investment advice or a recommendation. Nothing in this newsletter should be interpreted to state or imply that past results are an indication of future performance.

Fixed income securities are subject to interest rate, inflation, credit and default risk. The bond market is volatile. As interest rates rise, bond prices usually fall, and vice versa. The return of principal is not guaranteed, and prices may decline if an issuer fails to make timely payments or its credit strength weakens.

International securities involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.

Diversification and asset allocation do not ensure a profit or guarantee against loss.

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