When the trailing 10-year return gets up to this area, it typically means a bull cycle is far along, but hasn’t generally marked its end. If one had bought the S&P 500 when the trailing return was near its current level in 1984, 1992 or 1997, there was a bit of time before major declines — up to three years. Though the forward 10-year returns from those entry points were lower, they were positive — 7 to 14 percent a year.
Keep in mind, this trailing return will start to be weighed down simply by arithmetic, as we move ahead in time and the dramatic March 2009 low exits the 10-year return window, replaced by higher index readings as a starting point.
This broad perspective also sets aside the interesting but ultimately unimportant debate over whether this has been one continuous bull market starting at the March 2009 low, or a series of bull and bear phases. Some commentators insist that the snapback from the ’09 depths to the former 2007 high — which took until early 2013 — was the final act of the prior bear market that started in 2000.
Others view the near-20 percent drops in the S&P 500 in 2011 and late last year as cyclical bear markets that reset the clock to a new bull market. But for the typical investor’s experience, the score that matters is the appreciation over an extended period. Right now, this tally shows that the market doesn’t owe investors much in coming years, but frequently does deliver more upside before the tide reverses for real.
This is where the objections will come, arguing somehow that the past decade simply cannot be credibly compared to earlier periods. “It was all central banks,” they’ll say — which was also said in the ’80s and ’90s. (Also, the federal funds rate near 2.5 percent today is exactly where is stood in the “good old” 1950s.)
“But growth has been anemic,” many will argue. True, relative to the boom-bust postwar norm. But the ’90s were also denigrated as showing slow growth over a prolonged cycle, until near the decade’s end.
No matter the cadence of the economy or stance of policymakers, the market metabolizes it all by breaking the world down into corporate profitability, the cost of money and crowd psychology.
from Viral News Reports https://ift.tt/2GZrCDy
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