March 9, 2020

Happy Anniversary To The Bull Market

Author: Kristopher W. Carroll, CFA®, CFP®


March 9th 2009, marked the low of the last bear market. Today, 11 years later the S&P 500 opened at 2,764, down 18% from the all-time high just three weeks ago.

This 18% correction has been described as “violent” and has certainly been painful for many investors. The speed of this correction has been startling. Markets are responding to uncertainty over a viral outbreak, uncertainty over the economic impact of the virus and now uncertainty around a price war in oil.

In our experience, the thing that markets hate most is uncertainty. We have no control over uncertainty. However, we can and should have perfect control over how we choose to respond to uncertainty. Or maybe even better, how we do not respond. The last thing in the world that rational, long-term, goal-oriented investors should do when everyone is selling is…sell.

On the 11th anniversary of the last bear market, let us remember that stocks are roughly 315% higher than they were 11 years ago.

As billionaire investor Howard Marks wrote on March 3rd, “It would be a lot to accept that the U.S. business world, and the cash flows it will produce in the future, are worth 13% less today than they were on February 19th.”

How much more true is this a week later when we are down 18% rather than 13%.

Bottom Line: This too shall pass.

Market Update, Market Volatility

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