Market Update – Only Two Other Times in History

The rally that began around Christmas Eve continued with strength through last week.

It’s been such a strong rally that U.S. large company stocks (as measured by the S&P 500 index) even eclipsed the prior record high from last September…admittedly, an event of which I was skeptical.

Specifically, on September 21st the S&P 500 set a new intra-day high at $2,940.91. However, last Wednesday the S&P 500 touched $2,954.13 before closing down to $2,923.17. As I write this commentary on May 6th, the S&P 500 is trading around $2,910.

Now, unfortunately, the S&P 500 was the only major index to set a new high. U.S. small company stocks (Russell 2000) are still down over 8% from their August 31st record. The global stock market more broadly, including foreign developed and emerging markets (MSCI All Cap World Index), is still down over 6% from it’s all-time high set almost 16 months ago on January 26th, 2018. Yes, the global stock market is still technically in a bear market.

Here is the interesting part, when reviewing one of the most reliable valuations metrics available from John Hussman, we find that the U.S. stock market has experienced current extremes only two other times in history (1) 1929: on the eve of the Great Depression and (2) 2000 – on the eve of the Dot Com Bubble burst. Neither of those events ended well, and I don’t expect the current dislocation to end well either. Continue reading “Market Update – Only Two Other Times in History”

Drivers of Return Since 1982 and What That Means for the Market Over The Next 10 Years

I came across an interesting analysis in Dr. John Hussman’s recent commentary that I’d like to briefly share.

In the commentary he talks about the primary driver of market returns throughout the various cycles since 1982. It’s very important to understand this if you want to understand the potential return outcomes for the duration of the market cycle… emphasis mine Continue reading “Drivers of Return Since 1982 and What That Means for the Market Over The Next 10 Years”

This Has Never Happened Before. The MOST Extreme Stock Market Valuations In History

Executive Summary

  • Over the last month, U.S. stock market valuations, using the most historicallyreliable measures, have become the highest they’ve ever been. Ever.
  • Based on current valuations, the next bear market in stocks may result in losses exceeding 60% from the ultimate top.
  • The next decline will be painful for most investors as every bear market tends to be but particularly problematic for folks nearing retirement and those already retired. All their retirement plans may be in jeopardy if they do not take steps to adequately protect their wealth and preserve their financial independence first and foremost!
  • There is hope for disciplined investors who understand the difference between a marathon and a sprint! For those investors, the next bear market may provide many attractive, sustainable, and sound investment opportunities at much cheaper valuations.

Continue reading “This Has Never Happened Before. The MOST Extreme Stock Market Valuations In History”