uploads///US equities bull run

Rising Stocks: Why It May Not Be Time for the Jitters


Dec. 4 2020, Updated 10:53 a.m. ET

Russ explains why he continues to favor stocks over bonds, even as the S&P 500 notched new record closes last week.

U.S. equities advanced, with the S&P 500 Index notching new record closes over the course of the past two weeks.

Given that we’re in the sixth year of a bull market, investors are understandably getting nervous, particularly with rate and currency volatility spiking. Despite the challenges, there may be a compelling case for stocks.

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Market Realist:

US equity markets have had investors in a tizzy for more than six years now. Although positive news may not be forthcoming on a daily basis, the overall trend has been onward and upward.

The S&P 500 (SPY) has more than tripled since March 2009 when it touched a low of 676 points. The previous graph shows the 6-year upward trajectory that the S&P 500 (IVV), the Dow Jones Industrial Average (DIA), and the NASDAQ Composite (QQQ) have followed.

The current bull run is now the third-longest in history, as you can see in the previous graph. According to estimates by Goldman Sachs, the S&P 500 has rallied for more than 827 trading days without a significant 10% draw-down.

Rising stocks have been buoyed by various factors, including the accommodative monetary policy of the Federal Reserve and robust US corporate earnings. Quantitative easing and near-zero rates have helped propel equities higher.

Earnings have more than doubled since 2009. Indeed, FactSet Research estimates 2015 earnings will be $119.79 per share—based on bottom-up EPS (earnings per share) estimates—nearly double the $59.92 per share recorded in 2009.

Rising stocks have investors jittery about how much longer the party could last. Many investors are worried about the duration of the bull run and the lofty valuations that have become almost characteristic of US markets (VOO). In this series, we’ll explore the case for US stocks today and why it may not be time for the jitters just yet.


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