11 Nov

Must-know: Has the bull run in global equities ended?

WRITTEN BY Russ Koesterich, CFA

Given the recent extraordinary performance of most equity markets, many investors are wondering whether the bull market has run its course. Russ explains why valuation alone doesn’t signal an imminent correction.

Recently, the S&P 500 reached an all-time closing high, and U.S. equities aren’t the only ones hovering around record highs. On a global basis, stocks have advanced more than 40% since the summer of 2012.

Given the extraordinary performance of most equity markets and the percentage of gains driven by expanding multiples, it’s not surprising that many investors are wondering whether the bull market has run its course and an end-of-year swoon is on the horizon.

Must-know: Has the bull run in global equities ended?

Market Realist – Global stocks (QWLD) have had a stellar run since June 2012. Since then, the S&P 500 (SPY)(IVV) outperformed developed (EFA) and emerging markets (EEM). The American Index gave returns of 57.9%—compared to 14.9% and 37.4% of emerging markets and developed markets, respectively. This is 20.8%, 5.9%, and 14% compounded annually, respectively.

Although emerging markets underperformed the S&P 500 and the rest of the developed world, there’s a good reason to enter them. We’ll discuss this in the last part of the series.

In the next part of the series, we’ll discuss why valuations alone don’t signal an imminent correction.

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