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This bull market in stocks is now more than 10 years old – a senior citizen by market standards. Will it age gracefully from here, or are its days numbered? It’s probably neither, in our view.
Automobiles don’t have an expiration date. However, they do show wear and tear, and their performance is influenced by terrain, routine maintenance and gas in the tank. Market expansions are similar: They have no prescribed life span, but their longevity is driven by surrounding conditions and fundamental fuel (economic growth, corporate profits and interest rates).
We think there is still mileage left in this positive cycle – the traditional warning lights of a bull market’s exhaustion are not yet flashing. But with a total return of more than 400% for the S&P 500 since the bull market began, it’s likely past its prime. We believe routine portfolio maintenance and proper expectations can help you navigate the road ahead.
Over the past 70 years, there have been 10 previous bull markets lasting an average of just over 1,700 days.1 At 3,700 days, the current expansion is more than twice as long. The good news is that market performance over time is primarily driven by fundamental factors, not a timer. We think this bull has more life left in it because:
While the market’s broader path can still be higher, we believe this cycle is unlikely to age as gracefully as it has thus far. 2018 was a good example: Concerns over interest rates and global growth prompted significantly larger and more frequent market fluctuations than we had experienced previously. As we progress, we expect:
There’s more to the market than just U.S. large-cap stocks and, more importantly, more to achieving your financial goals than just stock market moves. To stay on track toward your goals, it’s important to maintain a well-diversified portfolio and realistic expectations for long term returns and potential volatility. We recommend:
1 Source: Ned Davis Research, measured by the S&P 500 index.
2 Source: Bloomberg, VIX Index.
3 Total return of S&P 500 index, 3/9/2009 – 03/13/2019.
Diversification does not ensure a profit or protect against loss in a declining market. Special risks are inherent to international investing, including those related to currency fluctuations and foreign political and economic events. Investing in equities involves risks. The value of your shares will fluctuate, and you may lose principal.