Comments Off by in CMW News
March 29, 2019

As we close out this week, this month and this 1st quarter of 2019, we remind our readers here is not the place to get an exclusive angle on this moment in market or the economy.

Instead we offer a filter on all the different angles available in the media for the meaning we believe this moment has for your long term money in the market. We focus your attention on your investment strategy, how to interpret its recent behavior and what to expect going forward for the near and long term.

What matters most, we believe, is that the US and global economies continue to be in an expansion mode. Additionally, in spite of headlines amplifying a bit slower growth, growth is still growth. And this comes after nearly if not the most momentum seen in the current expansion since the great recession. A good analogy might be the speed you’re traveling in your car on a highway trip. As you travel through a stretch of roadwork it’s likely you’ll step off the gas a little for the lower speed limit. Just because you slow down from 65 or 70 to 50 or 55 doesn’t mean you’re about to wreck!

In fact, one explanation offered for the very long endurance of this expansion and the bull market it has sustained is the sub-par rate of growth. As for the market itself, it doesn’t need rapid expansion of the economy to do quite nicely. We have the past 10 years as evidence of that.

This bull market has thrived on low expectations and nearly every time market sentiment has begun to sound optimistic we get a nice correction to throw off short term traders and undisciplined investors who don’t like the heat (or the volatility)! Aren’t you glad you’re not one of those? Look at the rebound you would have missed if you’d gotten out of the market toward the end of the rough ride last year!

From the high mark last fall to the bottom of the market on Christmas Eve, the S&P 500 blew out just short of 20% – the entire year’s gains, but the one year trailing return as of last Friday, March 23rd was 10.0%. And, that thud occurred closer to the end of any calendar year ever in history! Talk about timing and perspective. Dana Anspach has noted the average return over the following 12 months from a deep correction is 32%. The further the downturn the greater the recovery on average. This last one counts among the larger end of the correction spectrum.

Another historical pattern observed has to do with the third year of presidential terms, in which there hasn’t been a negative return for the market since the beginning of WWII in 1939.

Finally, we remind our readers that while we believe in preparing for bear markets by being in diversified global strategic investment allocations, no strategy can eliminate the pain of going through one while remaining invested. We believe the best antidote to fear is to know what to expect and having the confidence to stay put while going through one. Keep in mind the words of one of the great investors of all time, Sir John Templeton, “Bull Markets are born on pessimism grow on skepticism mature on optimism and die on euphoria.” We don’t see much euphoria out there. To the contrary we still hear more skepticism than optimism and pessimism doesn’t seem like such a fading memory either. Have great weekend!

Indexes are listed in respective order to their reference above: DJ Industrial Average TR USD, S&P 500 TR, DJ US TSM Large Cap Growth TR USD, NASDAQ 100, Technology NTTR TR USD, DJ US Health Care TR USD, DJ US TSM Large Cap Value TR USD, DJ US TSM Mid Cap Growth TR USD, DJ US TSM Mid Cap Value TR USD, DJ US TSM Small Cap Growth TR USD, DJ US TSM Small Cap Value TR USD, FTSE NAREIT All Equity REITs TR, DJ Gbl Ex US Select REIT TR USD, Bloomberg Commodity TR USD, MSCI EAFE NR USD, MSCI EAFE Growth NR USD, MSCI EAFE Value NR USD, MSCI EAFE Small Cap NR USD, MSCI EM NR USD, BBgBarc US Corporate High Yield TR USD, FTSE WGBI NonUSD USD, JPM EMBI Plus TR USD, BBgBarc US Govt 1-3 Yr TR USD, ICE BoafAML 1-3Y US Corp TR USD, BBgBarc Intermediate Treasury TR USD, BBgBarc Interm Corp TR, BBgBarc US Treasury US TIPS TR USD. These materials have been prepared solely for informational purposes based upon data generally available to the public from sources believed to be reliable. All performance references are to benchmark indexes. Performance of specific funds will vary from respective benchmarks. Past performance is not an assurance of future results. Each index cited is provided to illustrate market trends for various asset classes. It is not possible to invest directly in an index.