As December came to a close 6 weeks ago, we sent a short market update encouraging clients to mentally prepare for a bear market.
With stock indexes passing quickly through a correction (10% drop) in price and stopping at almost exactly a bear market (20% drop in price), it sure looked like we should expect a soft, if not rough, several months ahead.
But… in the nick of time the Federal Reserve Chair, Jerome Powell, let investors know the Fed has our backs!
The result was profound. Stocks quickly rose back to their previous and relatively “normal” historic levels. Pundits began saying “I told you so” and one of the shortest bear markets in history came to an end. (Bear markets on average last a little over a year - check out this from CBS if you need to know more detail on bear market stats.)
The technical damage has been done and the head winds are strong but as of mid-February 2019, the bear has retreated. It is more than unusual that we just experienced one of the shortest bear markets in history during one of the longest bull markets in history. Typically, the opposite occurrence would be expected.
So, what happens next?
Obviously, no one knows for certain. But a few observations are worth noting from the market action over the last 6+ weeks.