Tom and John Mills' Common Cents: Ten years, tremendous gains
Common Cents

Tom and John Mills' Common Cents: Ten years, tremendous gains


Where were you on March 9, 2009?

I was sitting at my desk in Napa and was wondering how long could this down stock market last.

I had been through down markets before, but this one seemed different. It was hard to find any good news, and like so many market declines, the future looked bleak.

The furious headwinds were dominating the news on Wall Street. When the closing bell rang at the New York Stock Exchange that Monday afternoon, it marked the end of another down day for equities. Just hours earlier, the Wall Street Journal had asked: “How Low Can Stocks Go?”

The Standard & Poor’s 500 stock index answered that question by sinking to 676.53, even with mergers and acquisitions making headlines. The index was under 700 for the first time since 1996. The Dow Jones Industrial Average tumbled to a closing low of 6,547.05.

To quote Dickens, “It was the best of times, it was the worst of times.”

With perfect hindsight, it was the bottom of the bear market – and it was also the best time, in a generation, to buy stocks. It took a measure of courage to buy stocks in early 2009.

The next day, a rally began. Buoyed by news of one major bank announcing a return to profitability and another stating it would refrain from further government bailouts, the Dow rose 597 points for the week ending on March 16, 2009.

On March 26, the Dow settled at 7,924.56, more than 20 percent above its March 9 settlement. No one was certain, but it looked like the bull market was back.

This bull market would make all kinds of history. In fact, it would become the longest bull market in history – at least by one measure.

While the last 10 years have seen some big ups and downs for the benchmark S&P 500, the index has never closed more than 20 percent below a recent peak in that span, meaning the current bull market is more than 10 years old.

Ten years later (at the close on Friday, March 8, 2019), the S&P 500 had risen 305.5 percent from that low. The Dow had gained 288.7 percent.

How about the Nasdaq Composite — 483.94 percent. (As you look at these impressive numbers, remember that past performance may not be indicative of future results.)

Those gains did not come without turbulence, and stocks in no way turned into a “sure thing.”

The risk inherent in the market is still substantial along with the potential for loss.

The lesson this long bull market has taught is simply that the bad times in the stock market may be worth enduring. Good times may replace those bad times more swiftly than anyone can anticipate.

As my grandpa used to say, “Don’t touch that dial, stay tuned, you ain’t seen nothing yet.”

Tom and John Mills are registered investment advisers and certified financial planners. Reach them at 254-0155. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Strategic Wealth Advisors Group (SWAG), a registered investment adviser.

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