Fake News And The Truth About This Bull Market

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by: 360 Investment Research

Summary

The bull market did not begin in March of 2009 as financial media claims.

There was a large scale correction and global bottom in February of 2016.

Continue to focus on price and not fake news or false narratives to guide your decisions.

There's fake news permeating the current market narrative: this bull market is over eight years old. For whatever reason, people are willing to regurgitate this inaccuracy over and over again until many market participants believe it's true. Yes, there was a significant bottom to the U.S. stock market (using the S&P 500 as our reference point) on March 6, 2009. Your math is correct to calculate 2009 as being eight years ago. However, we don't determine the length of bull markets from a bottom. We determine bull market length based on new highs. For example, we don't say the 1980s/90s U.S. bull market began in 1974. Rather, that a U.S. bull market began in 1982 after going nowhere for over 10 years.

Similarly, the S&P 500 did not exceed the 2000 and 2007 highs until 2013. So, in reality, the U.S. stock market went nowhere for 13 years. Not only that, we're also a year removed from a pretty significant bear market. Sure, the surface of the water (via S&P 500) didn't look too bad:

But when we look underneath this market of stocks, there were plenty of sectors and regions down over 20% from 2014 into early 2016. The flat S&P 500 in 2015 masked a ton of turmoil underneath. Here's the data:

  • Biotech -35% Jul 2015 - Jul 2016
  • Consumer Good -21% Jul 2015 - Feb 2016
  • Energy -64% Jun 2014 - Feb 2016
  • Financials -22% Jul 2015 - Feb 2016
  • Healthcare -18% Jul 2015 - Feb 2016
  • Industrials -29% Jul 2015 - Feb 2016
  • Materials -27% Jul 2014 - Feb 2016
  • Technology -26% Jun 2015 - Feb 2016
  • Russell 2000 -26% Jun 2015 - Feb 2016
  • NYSE -20% May 2015 - Feb 2016

Basically, this was a large-scale correction, which bottomed in February 2016. Yet, many don't recognize this due to bias and fake news narratives. These corrections lasted anywhere from 7 to 19 months. And we didn't even cover what was going on globally. Looking at different countries, emerging or developed, it was carnage:

  • Australia -20% in 10 months
  • Brazil -50% in 6 YEARS
  • Canada -22% in 1.5 YEARS
  • China -50% in 10 months
  • France -25% in 10 months
  • Germany -28% in 10 months
  • Hong Kong -35% in 10 months
  • India -24% in 1.2 YEARS
  • Italy -50% in 5 YEARS
  • Japan -28% in 10 months
  • Mexico -45% in 4 YEARS
  • Russia -74% in 8 YEARS
  • South Korea -17% in 6 YEARS
  • Spain -36% in 10 months

These are just some examples, but they're a good representation of what was going on globally. Large-scale bear markets. Not a month long, but double-digit months to years long. Many of these have not even made new highs yet, which is over 2 years of going nowhere.

But you know what's interesting? Almost every single market we track bottomed simultaneously in February 2016. No doubt about it. This was an important low for stocks across the globe. February 2016 could very well mark a generationally significant low. Even with these facts in hand, many seem to be waiting for the current market to crash or roll over. The great investor, Sir John Templeton, said,

"Bull markets are born in pessimism, grow on skepticism, mature on optimism and die on euphoria."

We would argue we are far from euphoria and somewhere closer to skepticism and optimism. Without a doubt, we will have more corrections along the way, but there's a real chance that February 2016 marked a major and significant low for the foreseeable future. As always, we'll use price, not fake news and market narratives, to guide our decisions.


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