Sunday, August 19, 2012

Predicting the Next Bull Cycle


The last twelve years has seen the S&P 500 go from a high of 1552 in March of 2000 to a current level of 1404, as of this writing. Yes, if you factor in dividends, the stock market has made money over the past twelve years, but to see negative nominal growth is still frustrating. To have this happen for such a long period of time makes us all realize that we are in a secular bear market, which is a long term downward or horizontal movement in the market. If you put inflation into the equation, your money in 2000 was worth considerably more than it is today, which is a double whammy after getting no nominal growth in that time period.

This is one of the many things we discuss at MGO with our Chief Investment Officer, Michael Moskal. It is a constant topic of conversation due to the fact that we manage about $500MM in total assets and we always have clients anywhere from factory workers to CEOs wondering how their 401(k) and managed accounts are doing.

Of course, many financial planners and wealth managers will argue that we have made it through the crap of 2008 and that we are on our way to new highs. Well, apart from the fact that if they didn't say that, they may lose clients, this is somewhat erroneous based on history. While that MAY be true, history has proven to show otherwise. Let's first discuss the non-data related information.

The average secular bear or bull market lasts 17 years. Since 1877, here are the secular highs and lows (adjusted for inflation) to show the kind of returns we have seen.....Here's the entire article with Charts

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