It’s a Bull Market!

At least technically. Here’s the S&P 500 chart for the last year:

The technical definition of a bull market is a 20% rise above a low. But that’s not set in stone. Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices in New York told Reuters:

“The problem is there is no authority of rules or regulations on there, 20% came back from the really olden days, like during the First World War, it was the first time we see it.”

He points out that in 2008, the S&P 500 rose by 20% before collapsing to an even lower low. However, today isn’t 2008. 

The comment above probably comes from bias, rather than fact. Most pundits expected the U.S. economy to go through recession. The driver everyone points to is inflation and prohibitive costs. But the results of those drivers should be wage decline and unemployment.

In fact, the opposite is true. The U.S. is fully employed, and companies’ profits are high. In addition, the number of companies citing “recession” as an impact on earnings fell for the third straight quarter, according to industry data from analysts at FactSet. 

The mixed outlook and concern are actually good news. An old Wall Street saying is: 

Bull markets climb a wall of worry. 

That means we should gauge the market by what it’s doing, not by what everyone thinks it should do. And right now, we have a bull market.

Good Investing,
Matt Badiali