March 9, 2019, marked what many consider to be the longest bull run in market history. Bull run, as in 10-consecutive years of increasing share prices in the stock market as a whole.
The previous economic catastrophe began on that fateful day of March 9, 2009, when the S&P 500 index hit a low point of 676.53. The S&P 500 has since then settled at 3,250.90 as of January 30, 2020. That represents a return of approximately 326% over a 10-year span.
The graphic above, courtesy of Investopedia, illustrates some of the noteworthy economic and political events that took place to sway the market upward or downward during this incredible 10-year run.
The big question remains to be "how much longer will this last?"
Perhaps the best course of action is to take a peek [under the hood] to examine the real-economic activity that has been taking place to identify clues that may reveal how much longer this extraordinary run will continue...
We can affectionately refer to this as the Calm before the Storm
I tend to approach this by first examining the actions that have taken place by some of the most influential CEOs in the marketplace. More specifically, I look to see if any major layoffs have been occurring...
Here are some of the notable layoffs that took place in 2019:
Nissan to announce 10,000 job cuts worldwide on August 29
GM expected to layoff at least 4,000 workers
Uber announces 400 Job cuts as Profitability Doubts Linger After IPO
Ford Motor Company to cut 12,000 jobs in Europe
Deutsche Bank could layoff 20,000 workers
Of course, there are many reasons that contribute to massive layoffs, but it usually boils down to two factors:
Falling Sales
Shrinking Profit
Another [under the hood] indicator goes a bit deeper into the weeds...
As an asset manager, part of my job is to allocate capital in the most efficient manner possible. With that said, I spend hours at a time studying the annual reports, balance sheets, cash flow statements and so on of potential investment opportunites that I have set a target on.
Without getting too detailed and technical, what I will say is this.
When allocating capital I hunt for companies that exhibit strong performance and then I look for opportunities to buy in when the market undervalues the stock price of those companies.
In today's climate, it is very difficult to nearly impossible to find worthy investment opportunities because most of the stock prices (market valuations) seem to be highly overvalued in relation to the actual value of the underlying business.
As a whole, the global economy and global profits are slowing.
This may be a good time to re-evaluate your investment portfolio positions if you have not already done so.
A recession hurts those who are unprepared and creates lucrative opportunities for those who have anticipated it.
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Disclaimer: Hudson Wealth Management, LLC (HWM) is a FINRA registered investment adviser firm. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and HWM's fee schedule. The information provided herein is for illustrative purposes only and does not constitute personalized investment advice, recommendations or solicitations to hold, buy or sell any investment or security of any kind. All images and return figures shown are for illustrative purposes only and are not actual customer or model returns. Past performance does not guarantee future results.
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