Monday, March 6, 2017
2016 turned out to be a good year for stocks. The year started down, but turnaround happened. And then, between Election Day 2016 and recently, the market added another spectacular two trillion in value.
Reviewing the years since the start of the 21st century, the years between 2000 and 2017 have had two large Bear and Bull Markets. The great bull market in technology stocks ended in 2000 with investors switching to real estate causing another wild bull market which ended badly in 2007-2009, followed by the next Bull Market in stocks beginning on March 9, 2009. And here we are finishing the seventh year of a Bull Market with a surge. If you have owned high-quality investments and stayed the course, you have done well. Read on for memories about the 18-year secular bull market of the 1980s and 1990s.
Sometimes a Bull Market does not seem like a Bull Market. The first four years were easy, but the last three wavered in a trough near the top reached during the first four. What amazes me – though I certainly expect it – is how well accounts are doing when the media is saying they are not. We have many investors withdrawing money from their accounts each month with the expectation of continuing this for years to come.
Maybe…just maybe…we are going into a period like the 1980s and 1990s when double-digit returns of 10% or better were common. Most people alive and paying attention in 1980 did not expect what happened going forward – the 1970s had become stifling. The current pro-growth agenda with intentions of lowering income taxes bears similarities to the principles implemented in late 1981. About a year later, we entered the great secular 18 year Bull Market which ended in 2000 with the high tech blowup.
As I think John Templeton said, “Bull Markets are born on pessimism and die on optimism.” One must retain confidence in one’s investments during all market cycles but not become over confident. I can remember talking with non-clients in the later years of the 1990s, and their confidence that their accounts would continue to make huge gains was unbounded (lots of high-tech). They received a rude awakening and, unfortunately, that is about all the financial pundits absorbed. The pundits’ current writing assumes all people lose all their money when a bubble in one area blows up. They know nothing about the kind of records our investors have earned staying in the markets through thick and thin and earning a reasonable return. But that is what Googins Advisors is all about.
We’d like to emphasize that we avoided being overly concentrated in the areas that “blew up” while having diversification in many areas and always using the managers we thought most skillful and careful. When the market goes down, you cannot usually avoid temporary losses in your accounts, but then recovery shows them climbing back to their real value.
We look forward to reviewing with you in person, phone, Skype, or email the performance of your investments and discussing financial planning techniques designed to keep all of us in sync with whatever new rules and rewrites the guys in Washington send us.