The Joy of July 8th, 2015

August 17, 2015

If history is to repeat itself, and all those who study history know as certain as the morning sun, it does, then given the reaction to market events that occurred on July 8th, 2015, the bull market that began on March 9th of 2009 has more points to run.

On Wednesday, July 8th of this year, you may recall that Greece was on the edge and potentially about to “Grexit”, China’s stock market bubble was imploding and the New York Stock Market, where millions of shares of stock trade every minute and in the middle of this global implosion, suddenly shut down for several hours.

When three un-related global events occur such as 1 – the inevitable bankruptcy of a relatively small economy, 2 – the decline of an inflated market like China’s and 3 – a computer glitch could initiate worldwide financial fear, we know that history has re-affirmed our truth.  Specifically that public psychology (fueled by the media) continues to be driven to panic and that fear wins over greed when a 4% peak to trough pullback in the stock market can inspire mindless panic.

Now, you may have missed all this if you were 1 – on vacation or 2 – not watching or reading the news – both preferable alternatives.

Our position is we are still early in the stages of a bull market and it likely has years and many more points to run.  It will not end until the cashier at our local grocery store recommends a stock we absolutely must own and our neighbours recommend we mortgage the house to invest.

So How Long will this Bull Market Run?

Stating first that I cannot make predictions, only observations that may suggest an outcome.  These are some interesting statistics on the US Economy.

The following are statistics collected by a US based investment company, First Trust Chief Market Strategist, Bob Carey in his Q2 summary.  I will let you come to your own conclusions.

U.S. nonfarm payrolls have increased for 57 consecutive months through June 2015. (Bureau of Labor Statistics)

  • The S&P/Experian Consumer Credit Default Composite Index stood at 0.88% in May 2015, a record low for the index. (Bloomberg)
  • U.S. auto sales hit a monthly annualized pace of 17.11 million units in June 2015. Sales bottomed during the recession at 9.04 million (annualized) in May 2009. (Bloomberg)
  • CoreLogic reported that, as of May 2015, home prices had reached an all-time high in 10 states and the District of Columbia. Thirty-three states were within 10% of their price peaks. (CNBC)
  • In Q1’15, S&P 500 companies distributed $93.55 billion in stock dividends, a record high for a single quarter. (S&P Dow Jones Indices)
  • The S&P 500 Industrials (Old) companies (excludes Financials, Utilities and Transportation issues) held $1.23 trillion in cash and equivalents on 3/31/15. (S&P Dow Jones Indices) The all-time high was $1.33 trillion on 12/31/14.
  • The Federal Reserve reported that the net worth of U.S. households and nonprofit organizations stood at a record $84.9 trillion in Q1’15. (The Wall Street Journal)