Bull or Bear in 2020?
This photo is a distortion. The bull should be three times the size of the bear. Why? While bear market average declines are 36%, bull markets advance 108% on average (Ned Davis Research; Hartford Funds, Jan. 9, 2020).
Will the bull market continue (S&P 500 up 31% in 2019) or will we have our first bear market in over 10 years? I suggest we simply pause, celebrate 2019, and not forecast 2020.
The legendary Fidelity Magellan fund manager from 1977-1990, Peter Lynch, often advised investors to ignore the market’s general direction and called those focused on short term movements “weekend worriers” (Barron’s Dec. 23, 2019). His response to those worried about a decline following a good market – “More people have lost money anticipating corrections than in the actual corrections.”
He’s right. If a year ago, following nine good years, you cautiously sold stocks, you would have missed a 31% advance.
There have been twenty-five bear markets (decline of 20% from a high) since 1929, and six in my career. There have been twenty-five recoveries and I’ve witnessed six, many of them with quite a few of you.
At OFM Wealth, we continue to manage to your individual, customized target blend of bonds, stocks, and multi-asset strategies. We don’t get too greedy or too fearful.
The Hourglass is an OFM Wealth Publication. All information is believed to be from reliable sources, however, we make no representation as to its completeness or accuracy. All economic and performance information is historical and not indicative of future results. Any market indices mentioned are unmanaged and cannot be invested in directly. Additional information, including management fees and expenses, is provided on our Form ADV Part 2.