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Investing: The Bull Market Turns 5 What Now?


The S&P 500 Index hit a low of 677 on March 9, 2009 at the bottom of the market drop connected to the financial crisis.  Since then the market has been on a tear, closing at 1,878 on March 7, 2014 for a gain of 178%.  Many market averages are at or near record highs.  As the rally celebrates its 5th anniversary what should investors expect going forward?

Birthday Party BashAccording to CNBC:

  • This Bull Market is the 2nd strongest since World War II
  • This is the 6th longest Bull Market of all-time
  • This is 4th strongest Bull Market of all-time 

How long do Bull Markets typically last? 

According to Zacks Investment Research the average length of a Bull Market since 1921 is 62 months and the average gain is 180%.  The median gain is 115% and the median length is 50  months.

At 60 months and counting with a gain of about 178% the current Bull Market is about average.

What’s next?

Over this past week I’ve heard varying opinions on CNBC.  Perpetual stock market Bear Harry Dent is predicting the Dow Jones Industrial Average will drop to 6,000 by 2016 from its current level of 16,453.

Another guest thought we were in the middle of a 15 year secular Bull Market.  Basically anyone’s guess is as valid as anyone else’s.

What should you do now? 

Perhaps more than ever a financial plan will put you on the right path.  If you stayed in the markets through the financial crisis and through these past five years your portfolio has likely done pretty well.  Perhaps you are even ahead of your retirement goals.  Your financial plan will help you determine where you stand relative to your goals.  This process will also help you determine if your asset allocation is still appropriate or if perhaps you should dial down your level of risk.

Investing when it feels good can be dangerous.  I wrote Investing: John Hancock’s TV Ad – Brilliant and Disturbing last year criticizing the company’s ads suggesting now was a good time to get back into the market.  Clearly anyone who did invest at the time of these ads did pretty well in 2013, but time will tell on longer term basis.  Moreover investors who feel the need to jump back into the markets because they feel like they missed out may live to regret that decision.

I have no idea what the future holds and I’m not saying that investing in equities is a bad idea.  What I am saying is that investors should not get caught up in the current market euphoria, but rather they should invest based upon their goals, risk tolerance, and the time horizon in which the money will be needed.

Please feel free to contact me with your questions. 

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Photo credit:  Wikipedia

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  1. I agree. Investing is a means to an end and should be in line with the goals you set out to achieve.

  2. Roger Wohlner says:

    Michael thanks for the comment. I think we are at an interesting juncture to say the least, as always the future will not be dull for investors.

  3. Anything can happen to the market in the future. No one knows. That’s why I do not waste my time watching the talking heads on CNBC voice their opinions of where the market is headed.

    • Roger Wohlner says:

      Thanks for the comment Bryce. I generally have CNBC on in the background during the workday to monitor the markets and the news and frankly for background noise.

  4. Great post but unfortunately when the average investor hears someone say they don’t know what’s going to happen to the market(even though this is 100% true) they look for someone that ‘does have the answer’.

    I’m not sure how to combat this problem but I’m working on it 🙂

    • Roger Wohlner says:

      Thanks Harry. In my experience I’ve not come across anyone who actually thinks that anybody has the answers in terms of what will happen in the future. More so they are looking for guidance as to how to position their investments for the future regardless of the market direction.

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