When trying to put in perspective the shortest bear market in US history—at least a bear market that saw the S&P 500 Index (S&P 500) sell off 30%+—there are any number of directions one can go. However, I decided to go with the children’s book we read to our son the most when he was a toddler, Bear Snores On— Llama Llama Red Pajama and Go, Dog, Go! were also quite popular, but luckily neither were his favorite as they can’t help frame a conversation around the end of a bear market!
If you are familiar with the story, Bear is hibernating in his cave and despite a howling wind and animals joining him to find shelter, he keeps sleeping and snoring away, until he doesn’t. Sort of like the bear market in US equities, which – after 103 trading days – officially ended last week. More specifically, on August 18 the S&P 500 closed at 3,389, just above its prior record close of 3,386, which it hit on February 19 (before beginning a bear market that would see the Index sell off 35%). Now one can make the case the bear market ended on March 30 once the S&P 500 rallied and closed 20% above its March 23 low of 2,192, but most folks on Wall Street feel a bear market has ended and a new bull market has begun only when the market closes above its prior all-time high. We have no desire to engage in such semantics, and we are aware the S&P 500 trades at about 25x earnings. We are in the seasonally weak period for stocks and the reopening of our economy is happening in fits and starts. Instead, for now, we want to appreciate and celebrate the unprecedented, and we feel appropriate, policy response to this awful pandemic, the remarkable resiliency of corporate America and the US consumer, and this historic – but not unexpected – rally in US equities. And, if you are so inclined, you can find a video of the author Karma Wilson reading Bear Snores On here. It is a delightful story.
Tagged: weekly wire, market perspectives, Tim Holland, bear market, COVID-19, S&P 500 Index, US equities