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  • J. J. Wenrich CFP®

The Bull Market Is About To Turn One

Market Blog

“The stock market is a giant distraction to the business of investing.” Jack Bogle, founder of Vanguard

First off, we hope everyone has a happy and safe Saint Patrick’s Day! We’ve had a lot of green out there over the past year and here’s to some more today and over the rest of 2021.

One year ago yesterday was one of the worst days in the history of the stock market, with the Dow losing 12.9%, the fourth worst day ever. In fact, only the ’29 crash, the ’87 crash, and the day after trading starting (after being halted for multiple months) in the midst of World War I in December 1915 were worse.

As the great Jack Bogle explained above, sometimes stock market volatility distracts us from our long-term goals. Many investors panicked and sold this time a year ago, only to see stocks soar higher, while bonds struggled and cash didn’t do anything. One of the most important takeaways from 2020 for long-term investors: it is important to have a plan in place before the skies turn dark.

As this current bull market nears the one-year anniversary of the March 23, 2020 lows, there will be a lot of reflection on how far we’ve come and where we could be going. The bottom line is the economy is recovering at a record pace, stocks are at all-time highs, and we’ll have the NCAA Tournament this year. Those are three things to be very grateful for.

So what happens now is the logical question? “The good news is previous bull markets have never been lower during the second year of their existence,” explained LPL Chief Market Strategist Ryan Detrick. “Although it won’t be an easy ride, investors need to remember that history is on the bulls’ side, as this bull market is still just an infant and continued gains are quite likely.”

As shown in the chart below, the previous six bull markets since World War II all saw gains during their second year. The average bull market was up 43% one year in and up to 61% two years off the lows. It is worth noting that the current bull market is up close to 75%, making it the strongest start to a new bull market ever, besting the start to the 2009 bull market. But be aware, that bull was up 68% one year off the lows, but up 94% two years off the lows. In other words, strong gains continued (the green line below).

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index and market data from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).

Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.

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