Monthly Economic Update – September 2018

A milestone for the long-running bull market

A milestone for the long-running bull marketThe month of August marked an interesting milestone for the long-running bull market. On August 22, 2018, the market, as measured by the Standard & Poor’s 500 Index (S&P 500), extended its run to 3,453 calendar days (CNBC, various sources), becoming the lengthiest bull market in history, or at least since World War II. While we may celebrate the milestone, let’s take a moment to review where we’ve been.

A few definitions:

First, a bull market happens when stock prices rise by 20 percent, usually after a drop of 20 percent and before a 20 percent decline (Investopedia). A bull market is generally measured from the lowest point in a cycle to its peak. The peak can only be defined in hindsight. That 20 percent decline, when not quickly recovered, is widely considered to be a bear market.

Second, although figures vary, a downturn of 20 percent or more from a peak in multiple broad market indexes, such as the S&P 500, over a two-month period, is considered an entry into a bear market (Investopedia).

Third, the S&P 500 Index bottomed on March 9, 2009 at 676.53 (data provided by St. Louis Federal Reserve). This “bottom” can be referred to as a “trough” – the inverse of a “peak.”


There’s no way to sugar coat it. Late 2008 and the year 2009 was a bleak time for investors. Brought on by a financial crisis, the economy was sliding into a recession. Companies were quick to jettison employees and corporate profits fell sharply. But, as we’ve seen multiple times historically, stocks found a bottom, a new bull market emerged, and the economy turned around. Few could have predicted the current cycle would run as long as it has. Or, for that matter, a run up as high as it has.

While not the best performing in history, the current run has advanced 329%, as Table 1 shows below.

Table 1: Longest Running Bull Markets Since WWII–S&P 500 Index Performance*

Trough-to-Peak Return
Oct 1990-Mar 2000 417%
Mar 2009-present** 329%
Jun 1949-Aug 1956 262%
Aug 1982-Aug 1987 229%
Oct 1974-Oct 1980 126%
Oct 2002-Oct 2007 102%

Sources: Yahoo Finance, St. Louis Federal Reserve, S&P Capital

*It is not possible to invest directly into an index.

**as of 8.31.18


What makes a bull market? A look behind the curtain

 The themes driving shares today have been in place to varying degrees since the economy bottomed in 2009 – economic growth, profit growth, and low interest rates. For much of the expansion, economic growth hasn’t been stellar, but it has lifted corporate profits, which are at record levels today (Thomson Reuters).

Let’s not completely discount the role of the Federal Reserve. To jumpstart the economy during the debilitating recession, the Fed pushed interest rates to rock-bottom levels and it has been slow to raise rates. Why does this lend support to stocks? Low interest rates encourage investors to look to other assets for income and capital appreciation. Put another way, low interest rates offer less competition for stocks. Add low inflation and the continued stream of stock buybacks from corporations (S&P Dow Jones Indexes), and powerful forces have come together to lift shares.


Overcoming hurdles

 Certainly, some market “headwinds” have temporarily interrupted the bull market or, at a minimum, created concerns over the last nine years. Financial turmoil in Europe, the U.K.’s Brexit vote, the collapse in oil prices, worries about China’s economy, and the 2011 downgrade of U.S. debt were just some of the headwinds that surfaced to create short-term volatility. When headwinds have failed to throw the U.S. economy into a recession, the focus has shifted back to the positive economic fundamentals, and the “bulls” prevailed. Looking historically, the bulls have always triumphed – eventually. With enough time, those who have “bet” on a long-term slide in stocks have been disappointed.


If we open our financial history books, the Dow Jones Industrial Average was below 100 in 1915. Today, it’s above 26,000. Even adjusted for inflation, the Dow is up more than tenfold over that time (Macrotrends). In the end, the bulls have historically won. Why? Short downturns in the economy – recessions – are followed by economic expansions that have run much longer than recessions. Over time, the economy’s value has continued to rise. We have witnessed this for over 200 years. The economy may or may not be larger next year, but history tells us it will be larger 10 or 20 years from today. Continuing along that same road, the major market averages are likely to follow a similar trajectory over a long period. That doesn’t mean we won’t see a sharp sell-off from time to time. It doesn’t mean that stocks will necessarily match the economy’s performance over a short period. But it does mean that, historically, we have witnessed a long-term upward bias for stocks.

Investor’s corner

 The longevity of today’s bull market has rewarded patient and disciplined investors. We talk about your investment plan because you can use it as a roadmap to reaching your financial goals. We stress this fact often. Our focus also helps pull the “emotional component” out of the investing equation.

By “emotional component,” we mean the feelings that tempt us to sell when the market pulls back. Or, for that matter, that may encourage us to get too aggressive when stocks surge higher. A proper plan enforces a disciplined approach. You might think of the story of the “Three Little Pigs.” One may take a disciplined approach. But, if that disciplined approach meticulously builds a house of straw, the inevitable winds will wreak havoc.

A disciplined approach, coupled with an investment plan built on solid, proven principles, has historically been the best path to pursue one’s goals.


Table 2: Key Index Returns*

MTD % YTD % 3-year** %
Dow Jones Industrial Average 2.2 5.0 16.2
NASDAQ Composite 5.7 17.5 19.3
S&P 500 Index 3.0 8.5 13.7
Russell 2000 Index 4.2 13.4 14.5
MSCI World ex-USA*** -2.2 -4.3 4.3
MSCI Emerging Markets*** -2.9 -8.9 8.9
Bloomberg Barclays US Aggregate Bond TR 0.6 -1.0 1.8

Sources: Wall Street Journal,, MarketWatch, Morningstar

MTD returns: Jul 31, 2018-Aug 31, 2018

YTD returns: Dec 29, 2017-Aug 31, 2018

*It is not possible to invest directly into an index.


***in US dollars



School’s out forever: Living in retirement

Do you know where you want to live when you retire? Some folks have mulled it over casually, while others have thoroughly researched it. Will you stay in your current home? Will you reduce clutter and downsize? Familiarity lends a sense of security, but downsizing may reduce your living expenses. Would you like to stay in the same town? Or have you thought about retiring in a new part of the country, or outside the U.S? If so, what is important to you? What is it about that location that attracts you? Is it more hospitable weather, the cost of living, family? Do beaches, the mountains, or golf courses beckon? Are you longing for a sense of community? Lists abound of the best places to retire. Many have value and keep the general needs of retirees in mind. However, what’s important to you must take precedence.


 You may have the ideal place in mind. On the other hand, you may still be considering your options. The Internet has plenty of information you can dig through. Consider the Retirement Living Information Center ( as one site that may be of assistance. Do you want to live near your children and grandchildren? Technology allows us to be in regular contact with our loved ones. But is Skype or Facetime enough?

A woman’s mother recently moved from Nebraska to Florida so she could be near her daughter and grandkids. She rents an apartment in an active adult community located in a suburb of a large city. With the help of her daughter and son-in-law, she regularly attends the grandkid’s events, including basketball, soccer, and school plays. She’s there for the major holidays. She is an important part of her family’s life. And she’s made close friends in her new community.

When choosing a residence, what features are important? Do you want to rent or own? What are your options for transportation? Must you live near a major airport? What are the centers for socializing? We are social creatures. We need friends. Active adult communities may be the bridge to new people in your life. Consider the simple pleasures of life. Can you walk to the store, the movies, local shops, and your favorite ice cream or coffee shop? What are the recreational options? What cultural options are available? The little things really add up. When you’ve narrowed down your locations, visit for at least a week or more, if possible. Vacationing is one thing; relocating is another. Talk to people who live there. Explore the area. Do you like the restaurants, the social climate? And what is the senior center like? Live like a local, because if you take the plunge, you will be a local! Ideally, visit when the weather is less than ideal. You can’t beat vacationing in Phoenix in January, but what about July? Will you be okay with Minnesota in the winter?


Importantly, what is the access to quality health care? About 77% of older Americans have two or more chronic conditions, according to the nonprofit National Council on Aging. Can you quickly find a primary care physician who accepts Medicare, or is there long wait to see a doctor? If you are a person of faith, attend services at the religious institution you may want to join. If your religion is an important part of your life, it should be represented in your community. If not, relocation could be less comfortable for you.


Our goal is to get you thinking. How you answer these and other questions will point you in the right direction and help determine the ideal home and location for you. One note of caution: No single place is perfect. You will make trade-offs. You can compromise on the wants, but your necessities should take precedence.


Final thoughts

One question you must answer – can you trade your friends, familiar surroundings, and your favorite cultural institutions and sports teams for the unknown? Expect an adjustment period. Adventure may await, but the unfamiliar can produce stress and anxiety. Finances will loom large in retirement. For some, we’ve been diligently working toward your goal. For others, know that our team can assist with the mathematical part of the equation.

Researched and drafted by Charles Sherry and Horsesmouth.

Provided by

Philip Lockwood | Founder + Managing Partner

Address:3100 Ingersoll Ave. Des Moines, IA 50312

Phone: 515-274-8006

Fax: 515-274-8033


Website: Lockwood Financial Strategies



P.S. As your advisor, I am here for you, as well as for your graduating students. If you or they have any questions, please contact me. Send me an email at or give me a call at  1-877-274-8006.


Securities offered through Parkland Securities, LLC, member FINRA ( and SIPC ( Investment Advisory services offered through SPC, a Registered Investment Advisor. Lockwood Financial Strategies, LLC is independent of Parkland Securities, LLC and SPC