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Remember This? |
The
S&P 500 crashed more than 50% during the Great Financial Crisis of 2008/2009. Yesterday marked the nine-year anniversary of the S&P 500's infamous intraday low of 666. The index put in its closing low of 676.63 three days later, on March 9, 2009.
The sell-off prompted then newly elected President Barack Obama to make
one of the greatest stock market calls of all-time. On March 3, 2009, Obama told America, "What you're now seeing is profit-and-earnings ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it."
Since then, the S&P 500 has recovered all of its losses from the financial crisis, and then some. The nine-year rally is the
second-longest bull market of all-time, with the S&P 500 increasing nearly fourfold, producing a total return of 385% (19.2% annualized) when dividends are included, and rising almost 300% in price alone.
The video clip above serves as a reminder of just how scary, confusing and depressing the times were. In contrast, today unemployment is at a low 4.1% and the economy is growing at a 2.5% rate.
While volatility has returned, and we anticipate more of it in 2018, economic fundamentals remain strong. This anniversary reminds us that investors who stuck to their long-term plan throughout the 2008/2009 crisis saw a strong return on their money. We believe a long-term investment approach remains where the 'smart money' is today.
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Though stocks started the week strong, interest rate fears rose again midweek and stocks fell sharply. Investors analyzed various remarks by Federal Reserve officials last week with some believing the committee would raise rates 4 times this year instead of just 3. Then, after President Trump's surprise announcement about new tariffs on steel and aluminum, worries over potential trade wars dragged stocks down further.
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> Tariff Tantrum:
Last week, President Trump proposed import tariffs of 25% on steel and 10% on aluminum. Stocks traded with heavy losses on the news, as fears of a trade war reverberated throughout global financial markets.
The administration said it wants to combat cheap metals flooding into the United States, particularly from China, but a broad set of tariffs would fall most heavily on allies, especially Canada, which supplies steel and aluminum to American companies as well as the military.
> LEI:
The Conference Board's Leading Economic Index (LEI) is a good snapshot of the overall health of the economy, and it has historically provided early warnings of recessions and the start of bear markets. The LEI is an aggregate of diverse measures including data on employment, manufacturing, housing, bond yields, the stock market, consumer expectations and housing permits. The latest reading for January 2018 rose 6.2% over the past 12 months, signaling a low probability that a recession will cause a bear market in the next year.
> Italian Elections:
Italian voters have taken a step to the right, with the anti-euro Five Star Movement and the anti-migrant League parties capturing a surprising amount of support over last weekend's elections. The rise of populism was squashed in France and Germany, however these elections in Italy give pause to anyone betting on closer integration as a reason to buy the euro.
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When J. Sterling Morton founded Arbor Day back in 1872, his idea was simple: set aside a special day for tree planting.
The first Arbor Day celebrated the planting of more than a million trees in Nebraska, and is now observed across the nation.
Trees have numerous benefits; they can reduce the erosion of precious topsoil, cut heating and cooling costs, moderate the temperature, clean the air, produce life-giving oxygen, and provide habitat for wildlife. Trees are a renewable resource giving us paper, building material and fuel for fires. Trees increase property values, enhance the economic vitality of business areas, and beautify our communities.
National Arbor Day is celebrated on the last Friday in April, but many states observe Arbor Day on different dates throughout the year based on best tree planting times in their area. Arbor Day in our home state of California is observed for a 7 day period, starting today!
To learn more about Arbor Day or look for places to volunteer for a tree planting event near you, visit:
arborday.org/celebrate.
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New Market Wealth Management offers modern investment solutions backed by extensive research and experience serving the needs of wealthy families. Through our strategic partnership with
Cliffwater LLC
, we have access to institutional-quality research, investment due diligence and asset allocation tools. We believe this level of experience and unique access to in-depth, sophisticated research are essential for success in today's complex world markets.
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