Market BullyMarch 6, 2019 -
Categorized in: IAG News
They grow up so fast.
March 9, 2009, seems like just yesterday, but it will be a full ten years in just a few days.
Ten years ago a precious little baby bull market was born. This baby bull didn’t look like much at the time and didn’t garner much attention at first.
One article from the Wall Street Journal announced the baby bull’s birth with the following:
“Just how low can stocks go? Despite Friday’s small gain, the Dow Jones Industrial Average marked its fourth consecutive week of losses as it tumbled through the 7000-point mark and spiraled to new 12-year lows.” (“Dow 5000? There’s a Case for It,” Annelena Lobb, March 9, 2009, Wall Street Journal)
While we certainly didn’t see it at the time, today we know that that little baby bull was destined to grow up to be one of the longest-living bulls ever.
But has our bull grown too big? Has our bull market turned into a . . . market bully?
The Federal Reserve would likely make this case based on the bull market’s crushing stampede after their December rate hike decision.
While the Federal Reserve likely raised rates in December in some measure to show they were in control of interest rates (despite calls from the markets and President to the contrary), the markets bullied them into full retreat mode a mere week later. Even the Fed is now afraid of losing the bull.
In our opinion, much of the market’s rally since Christmas Eve is the direct result of the market’s successful interest rate bullying after the last Fed meeting. Our market bully now believes it controls the Federal Reserve going forward.
We all know that one day a bear will come along and kill our bull when he is most confident. The headlines that day will likely read something like “Dow 50000? There’s a Case for It.”
Until that day comes, we continue to wish our bull a happy birthday. Or else.
Quote of the week: Benjamin Graham: “The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs) you should welcome a bear market, since it puts stocks back on sale.”
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