Why Bull And Bear Market Talk Is B.S.

This is officially the longest bull market in history. Or so I am told.

According to CNBC, this bull market run is 3,455 days old. It began in March of 2009 and has eclipsed the previous record run from 1990-2000. A bull market is a period in which stock prices rise without experiencing a -20% or more decline.

The thing is, who cares?

Bull and bear markets are irrelevant. The terms mean nothing. Investor Joseph Fahmy sums this up well:

(source: twitter.com/jfahmy)

I could not agree with him more. I understand why so many people talk about bull markets and bear markets. We are conditioned to think about investing in those terms because the financial media fascinates about them.

And in fairness I can see why. It keeps it simple and we like simple.

Bull market = Good
Bear market = Bad

We typically like things explained in black-or-white terms. So we use bull vs. bear markets as a primary way of judging the overall stock market because it requires little time or thought.

The problem is, it provides no value. The market is anything but simple and the notion of debating whether the bull market will end is largely emotional. Investing should be process-based and as emotionless as possible. I cannot imagine someone basing their investment decisions on whether they think we're in a bull market or a bear market. 

If someone asks me how long I think the bull market will continue here is what I say: The overall U.S. market remains in a rising trend, which to me, started back in the summer of 2016. When I say rising trend I mean the price trend of the S&P 500 index. It is based on the various timeframes we analyze. Until that rising price trend is broken, the benefit of the doubt goes to the market's ascent.

I will leave the bull market/bear market mumbo jumbo to others and instead continue to focus on the price movement of the stocks that comprise the overall U.S. market. To anyone who manages money, I would recommend they do the same.

In The Market...

The S&P 500 gained +0.9% last week. Let's look under the hood:

(price data via stockcharts.com)

The S&P is sitting at a new record high. The growth sectors all finished in the green while the dividend-heavy sectors (Real Estate, Utilities and Consumer Staples) were the lone losers. I found it interesting that bonds rallied (interest rates lower) amid the rise in growth stocks. But oh well.

We are fully invested across all of our portfolios and continue to be weighted toward Technology, which continues to lead the overall market higher. The Tech sector jumped to a record high as well and remains the healthiest looking sector out there.

If the market can continue to rise into September it may set up for a very nice end to the year. Seasonally speaking, the fourth quarter is the strongest. There is nothing more bullish than new price-highs and we are seeing them across many stock names.

In Our Portfolios...

What's New With Us?

It was a weird weather weekend here in Seattle, between the overcast and the haze that is still present from the B.C. fires. I managed to get some yard work done. While the smoke was bad early in the week, by the time most of it cleared on the weekend I'm not sure the air was any worse than it normally is in other major cities. I suppose we must be conditioned to having the cleanest of air.

Have a great week!

Brian E Betz, CFP®