September 2018 Financial Markets Summary

We just surpassed a major milestone for the domestic stock market!  This current bull market is now the longest in history, depending on who you ask.  Bull markets generally occur when the stock market realizes a 20% or more gain without a corresponding 20% loss.  Bear markets, on the other hand, are characterized by a 20% or more drop in stock market prices.  With the current bull market starting in March, 2009, this 9.5 year run is certainly one for the record books.  Technically, the longest in history was actually from 1987 to 2000, but the S&P 500 suffered a 19.9% loss in late 1990.  Most round down the 19.9% loss and classify this as a recession.

Whether the current bull market is the longest or second longest in history, let’s review what got us here.  The first main driver was triggered by easy monetary policy from the Federal Reserve in the depths of the recession.  The Fed Funds rate was slashed to an unprecedented 0% and trillions of dollars were pushed into the financial system via the Fed’s Quantitative Easing (stimulus) program.  More recently, the current administration’s pro-business policies of cutting regulations and corporate tax rates have added more fuel to the fire.

Even though this bull market has lasted longer than average, it doesn’t suggest a recession is right around the corner.  The underlying fundamentals of the economy and the companies are still strong.  Unemployment rates are at record lows, GDP growth continues to tick higher and corporations continue to generate high profits on their improved balance sheets.  Bull markets do not just die of old age.  There is typically a catalyst to cause this change, not the age.  The cause could be the Federal Reserve increasing interest rates too quickly, rampant inflation or even a geopolitical event to name a few.

None of these, in our eyes, are red flashing lights suggesting an imminent recession, but history would suggest that we are in the later stages of the bull market.  Returns may be more muted in future years, and we feel that now is important as ever to maintain a diversified approach with your portfolio.

Asset Index Category Category Category 5-Year 10-Year
3 Months 2018 YTD Average Average
S&P 500 Index – Large Companies 7.2% 8.5% 12.2% 8.5%
S&P 400 Index – Mid-Size Companies 5.0% 7.6% 11.6% 9.6%
Russell 2000 Index – Small Companies 6.6% 13.4% 11.5% 8.9%
MSCI ACWI – Global (U.S. & Intl. Stocks) 2.7% 1.9% 7.5% 4.5%
MSCI EAFE Index – Developed Intl. -0.7% -0.4% 5.8% 3.7%
MSCI EM Index – Emerging Markets -4.7% -4.6% 5.2% 3.4%
Short-Term Corporate Bonds 0.5% 0.1% 1.3% 2.3%
Multi-Sector Bonds 0.5% -1.6% 2.5% 3.7%
International Government Bonds -1.7% -1.0% 0.7% 2.0%
Bloomberg Commodity Index -7.2% -2.1% -8.0% -7.6%
Dow Jones U.S. Real Estate 7.5% 2.3% 10.6% 7.6%


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only.  Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy.  It is provided with the understanding that no fiduciary relationship exists because of this report.  Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice.  PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice.  If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives.  All rights reserved.