Bull and bear markets are cyclical in nature; lasting on average 10 – 15 years; some longer and some shorter. The current bull market began in 2013, not 2009. While 2009 was a bear market bottom, it did not mark the beginning of a bull market. More sophisticated investors know that the bull market began when sustainably eclipsing the height of the prior bull market, before that prior bull market was extinguished by a bear market. You can see it in the chart below (courtesy of Telemet Orion) as the prior bull market which began in 1982, ended in March 2000. That subsequent bear market lasted 13 years.
Along the way, there are counter-cyclical moves such as the market advance in 2006-07 and the sharp market decline in last year’s 4th quarter. The mistake that investors make is to confuse short term counter-cyclical moves in the markets as sustained changes in the character in the market. Hence, the 4th quarter 2018 sell-off faked many people out of the market, as did the stock market crash in October 1987. As a professional manager, I had to walk many clients away from the edge of the cliff in December. They are grateful that I did so.
Last week, the current bull market extended its gains, once again to new all-time highs for most of the major indexes. On Friday, the Standard & Poor’s 500 Index (SPX) closed at an all-time high of 2,939.38. This is a significant achievement given that we are amid the 1st quarter earnings season. The index is just over 1% below my year-end target of 2,975; but just over 4% below my year-end target of 3,100.
Of course, my targets are set in the spirit of the old Wall Street Week with Louis Rukeyser, in so much as those prognostications are set in stone before the year begins. As I also do however, when I publish my mid-year investor letter, with two quarters of earnings in the books, I might change that year-end target.
Today, it appears that the market will have a muted open as earnings continue to trickle in. I put on a nice trade in the semiconductor space using the Direxion Daily Semiconductor Bull 3x ETF (SOXL) a few weeks ago. After Intel’s (INTC) earnings report, the sector has slipped a bit. I am going to give the trade a little more rope before I take some of the positions off the table.
Here is a link to my recent interview on the TD Ameritrade Network.
Let me leave you with another history lesson. On this day in 1961, the first broadcast of ABC’s (now owned by Walt Disney (DIS) ) Wild World of Sports premiered. Yogi Berra hit a home run off of Jim Perry in the top of the first inning with one base runner aboard leading the home team Yankees to a 4-2 victory over the Cleveland Indians. That marked the early stages of one of the most successful baseball teams of all-time. During the game, while my father and grandfather watched the broadcast at home in Miller Avenue in Brooklyn, my mother went into labor and I was born several hours later.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long INTC & SOXL – although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right-hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage, and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– You can email Scott at firstname.lastname@example.org
© 2019 LakeView Asset Management, LLC. All rights reserved.