Hello, everyone – my name is David Presson
and I’m the Director of Investments for First Bank Wealth Management. Did you know that on August 22nd, a little
over two weeks ago, marked an important milestone in the history of the U.S. stock market? As of August 22nd, this current bull market,
which began on March 9th, 2009, became the longest running in history at 3,455 days. We’re now at 3,466 days and still counting. The previous record for the longest running
bull market was 1990-2000. We define a bull market as any continuous
uptrend without any declines of at least 20%. Now, as shown by this next chart, which ranks
bull markets by returns, we can see where this one ranks so far. Since this current uptrend started, the S&P
500 is up around 425%, or a little over 19% annualized. So while this current bull market is the longest,
it’s not the highest returning, or at least not yet, as it still trails the bull market
of the 1990s driven by the internet and technology boom, which was up 545% and the post-World
War II bull market which was up 488%. But the final chapter on this current bull
market has not been written yet. So we’ll see if this bull market continues
and see if we can break the record for going the longest, but also the strongest. Just because it has been the longest running
bull market in history doesn’t mean it was easy to stay the course along the way. Remember how worried and concerned everyone
was in early 2009, when this current uptrend would continue or not? We’ve also had several stomach-turning drops
along the way driven by such headlines as the European debt crises in 2010, the downgrade
of U.S. debt in 2011, the government shutdown in 2013, ebola virus fears in 2014, Chinese
stock bubble popping in 2015, an almost 80% drop in the price of crude in late 2015 to
early 2016, Brexit in the summer of 2016, and then the U.S. election uncertainties in
the fall of 2016. Plus, we’ve had several interest rate spikes
along the way – and this year we’ve had worries about trade war. So, while there were several scares along
the way, those that stayed disciplined were rewarded by this current long-term trend in
the stock market. But bull markets don’t just die of old age;
there’s usually either an economic downturn or some major geopolitical event which becomes
the catalyst for a correction. But at the last market peak in 2000, 10-year
bond yields were over 6% and the P/E multiple was always 30. Today, bond yields are under 3% and the P/E
multiple is around 17, which is not that far above the long-term average of around 15. So it seems like it’s much more reasonable
valuations today and no extremes by any measure. But just because the market is up is no reason
to get complacent. We know that the next major downturn is looming
out there somewhere, so make sure you’re prepared with the right asset allocation strategy. And finally, don’t count on your friends in
the media to tell you when the next downturn is coming – and I use “friends” here in air-quotes. If you look at these headlines, and I’ll pause
here for a few seconds so you can look at some of these headlines, as the media tried
to scare you out of the market. And talk about your fake news, check out some
of these headlines. So, in closing, thank you for tuning in today. If you have any feedback or any suggestions
for future market topics, please shoot me an email at david dot presson at fbol dot