1. Is it a New Bull Market?
The stock market is the only market where things go on sale and all the customers run out of the store. If you want some good deals, you need to buy when they are lower.
In my blog post last October, I shared a chart illustrating past declines and subsequent market performance. Back then, the market outlook looked bleak and many people predicted further declines.
Fast forward 8 months, and we have seen the stock market rebound 23%. It is widely considered a new bull market once stocks are more than 20% off their lows
2. Recession Concerns
Despite the stock market rally, It may not feel like we are in a bull market yet. A recession is not out of the question until we get inflation under control.
If you wait until you feel better about the economy, you might miss the beginning of a bull market. Historically, the S&P 500 has bottomed out an average of three months before a recession ends.
3. Can The Rally Continue?
U.S. stocks have had their best start to a year since 1997, which bodes well for the rest of the year. Historically, a strong start has resulted in a positive overall annual return, with an average increase of 25.7%.
4. Concentrated Bull Market
Although a new bull market has begun, it has been driven by a small number of stocks. Seven stocks have accounted for 75% of the index’s return this year.
If these large companies were removed from the index, the S&P 500 would only be up a few percentage points for the year. It is likely that we will need to see broader participation in the market in order to sustain this rally.
5. How Long Will The Bull Market Last?
The average bull market lasts 5.5 years, which is four times as long as the average bear market. During bull markets, the S&P 500 has historically gained an average of 183%.
However, bull markets rarely go up in a straight line. Most bull markets include sell-offs of 10% or more. There will always be reasons to sell.
Bottom Line
The key is to stick to your plan. Find an approach that fits your goals and try to ignore the news. For me, that means analyzing data and understanding how markets have behaved in the past. That helps our team make informed decisions about where to invest.
And that’s all for this week. Check out my Twitter (@ChicagoAdvisor) for more frequent updates. Have a great weekend!
George Maroudas
847-550-6100
george@pmgwealth.com
Twitter @ChicagoAdvisor
Disclaimer / Sources:
U.S. stocks after declining 25% or more from George Maroudas (@ChicagoAdvisor) . Data from YCharts as of 6/22/23.
When recessions start and end from eToro. Data from Bloomberg.
Best performance through 114 trading days from George Maroudas (@ChicagoAdvisor) . Data from YCharts as of 6/16/23.
Concentrate bull market chart from George Maroudas (@ChicagoAdvisor). Data from YCharts as of 6/15/23.
History of U.S. Bear & Bull Markets from First Trust. Data from Bloomberg as of 6/30/22.
To read more on stock market concentration, check out my blog post here.
Stock investing includes risks, including fluctuating prices and loss or principal. This information is not intended to provide specific advice or recommendations about any stock nor is it intended to be a recommendation to buy, sell or hold any stock investment. We suggest speaking with your financial professional about your situation prior to investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice.
