Homepage / Investment / Second-longest bull market ever aging gracefully, but investors wonder how long it will last
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election


Second-longest bull market ever aging gracefully, but investors wonder how long it will last

“Age is just a state of mind” is a laugh line in the geezer comedy “The Expendables” and a wan Hallmark-card slogan. But it also captures the sentiment of an investment scene dominated by talk of the “aging bull market” in stocks.

At 8½ years since the prior bear market ended in March 2009, this advance in equities is now the second oldest on record without at least a 20 percent drop in the S&P 500.

And the appreciation in prices across asset classes has most investors talking about “high valuations” today and “muted returns” in years to come, given the “late-cycle environment.”
These were themes running through Tuesday’s Delivering Alpha conference presented by CNBC and Institutional Investor.

Long-tenured hedge fund manager Leon Cooperman of Omega Advisors called the stock market “fully or fairly” valued, dependent on 4-5 percent earnings growth plus dividends in coming years.

But, he added, “the conditions that normally lead to significant market decline are either not present or not forecastable,” including an oncoming recession, a hostile Fed, dangerous inflation, investor exuberance, speculative valuations or a geopolitical shock.

When asked about the Massachusetts Pension Reserves Investment Management fund’s 7.5-percent annual return target, its chief investment officer, Michael Trotsky, said:

“I’ve been very clear when it comes to my constituents, in that for the next five to seven years I don’t think our portfolio is likely to return that. It’s a bit hypocritical because for the past three and five years, we’ve returned over that. But I view it as kind of borrowing from the future. We’ve all talked about equity valuations in particular being fair. You can argue whether they are overpriced or underpriced, but everyone in the room can at least agree they are fairly valued. So it’s going to be more difficult.”

Credit hedge-fund founder Boaz Weinstein of Saba Capital, added: “The reward isn’t there” in high-yield bonds — an asset class that often leads equity markets and is now widely owned by retail investors craving scarce income.

So, there’s broad agreement that markets have been generous for a pretty long time and the trees are stripped of the low-hanging fruit.

Still, saying the bull market is getting on in years and might be slowing down doesn’t mean it must end soon or is through having fun. Today’s 70-year-olds have achieved the biblical life span, and when they were born in 1947, life expectancy for Americans was under 70 years. Yet a 70-year-old right now can expect to live 15 more years.

And for as old as this bull is, it has proceeded at a fairly measured pace. The S&P 500’s annualized total return since the depressed March 9, 2009, launch point has been 17.5 percent — quite healthy but not particularly excessive by the historical standards of bull-market gains.

What’s more, the current trailing 10-year annual return for the index — which stretches back to just before the 2007 precrisis peak — is only 7.6 percent. At previous major bull market peaks, this 10-year annual pace has routinely been above 15 percent.

An exception to this was the 2007 peak, when it was roughly the same as the current level. And it wouldn’t take much upside from here to make that 10-year record look pretty good. If the S&P were to climb just another 10 percent in the next 18 months, the 10-year trailing return will exceed 15 percent by the time we hit the 10th anniversary of the 2009 bottom.

Everyone knows this math, and all investment professionals can see that stocks look rather rich by most fundamental measures, which is restraining their enthusiasm and making many reluctant buyers.

This week, Goldman Sachs strategist David Kostin felt moved to answer clients’ constant calls for a market correction with the case for why one was unlikely (sturdy consumer trends and investors’ own caution). The monthly Bank of America Merrill Lynch global fund manager survey showed above-average fund cash levels and the highest incidence of downside hedging in 14 months.

There aren’t many conspicuous distortions or worrisome stresses in the capital markets at the moment. All asset classes appear similarly stretched in valuation — yet rationally valued in relation to one another.

This is a world of 1 percent Fed-determined short-term rates, 2 percent 10-year Treasury yields, a 2 percent S&P 500 dividend yield, 3 percent corporate bond yields, 4.5 percent “free cash flow” yield on stocks and 5.5 percent junk-bond yields. Not exciting, hard to get excited about, perhaps insufficiently compensating for risk. But nothing says it must end soon, or what will come along to disturb that arrangement of asset-class orbits.

Ed Clissold, chief U.S. strategist for Ned Davis Research, believes the “mid-cycle earnings recovery” we’ve seen this year presents a risk heading into 2018. Past cycles suggest these profit revivals peter out after about a year and stocks can struggle once earnings-growth rates peak.

Doug Ramsey, CIO of Leuthold Group, has been bullish since the early-2016 correction abated but remains wary of the market’s staying power. “We believe this bull market still has legs … but so might the mini-correction that’s hit mainly the secondary stocks so far,” he wrote to clients last week, before the S&P 500 blipped to a slight new all-time high in recent days.

He grants that market uptrends don’t expire based on the calendar, but suggests investors also are not entitled to generational advances of the ’80s-’90s type.

“It’s commonplace for stock market bulls to observe that cyclical ‘bull markets don’t die of old age.’ Maybe not,” Ramsey said. “But if age doesn’t matter, will they also acknowledge that ‘not all secular bulls last 18-20 years?’ Very doubtful.”

It’s a debate we might be having for some time to come, as long as this bull keeps aging gracefully.

Source: Investment Cnbc
Second-longest bull market ever aging gracefully, but investors wonder how long it will last

Comments are closed.