It has been said lately by a number of stock market gurus that we’re in the 6th or 7th inning of this bull market. It’s been good for the past 6-7 years, so we surely would welcome three more years or three more innings of upward movement of the stock market. We don’t know what the future of this bull market holds, but three more innings would make this one of the longest bull market runs in history. The S&P 500 bull market that began on 3/9/2009 is now in its 74th month. The average bull market for the stock index since 1950 (including the current bull market) has lasted 59 months (source: BTN Research). If only it was that easy.
However for us baseball fans, we know that the middle to later innings is when a lot of “change” happens. The starting pitchers may get tired. The bullpen starts to get anxious. Lineup changes start with pinch hitters and players enter the game for defensive purposes. The coaches are starting to think of various strategies to close out the game. And the fans find this part of the game exciting with the anticipation something big happening soon.
So if we are in the 6th or 7th inning of the stock market, we are entering an exciting time. And there will be change. That’s for sure.
In the case of the stock market, this change is referred to as “volatility”, which can be big “swings” of ups and downs. That means in these next few innings, we will see the stock market, stock prices, and bond prices, to be volatile.
Focus on your goals
During these times, you need to focus on what strategies will help you meet your goals. In most cases, thinking long term and finding diversification is the starting place. If you’re investing in your 401k, and you have plenty of years until retirement, be mindful of the long term track record of stocks. Although stocks can bring about the greatest amount of volatility, they have historically produced attractive returns over long term periods. Meanwhile, if you’re looking to preserve your principal, usually the track record of a well-diversified portfolio, including alternative investments, softens market volatility.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The S&P 500 is an unmanaged index which cannot be invested into directly. Past performance is no guarantee of future results. Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.