When Markets Hover
By Bob Barber, CWS®
If you’re starting to get impatient with how the markets seem to be in a flat trading range since January, you may not realize that it’s normal many times for markets to hover around a certain range for extended periods of time every few years. Then unexpectedly, without notice, they will break out of a sideways pattern and rally to new highs or possibly go lower. Below are times since 2010 this has happened.
From April 2010 until October of 2011 (18 months) the S&P 500 index hovered around 1200 and then it broke out to go onto new highs.
From March 2012 until December of 2012 (9 months) the S&P 500 index hovered around 1400 and then it broke out to go onto new highs.
From November 2014 until July of 2016 (20 months) the S&P 500 index hovered around 2050 and then it broke out to go onto new highs.
From January 2018 until today (6 months) the S&P 500 index has been hovering around 2650-2700. We don’t know yet how long it could stay in this range.
If you add these four time periods and divide by four, you find the average hovering time is approximately 13 months.
These past time frames serve as reminders to us all, because we as humans sometimes have short term memories (especially in today’s high tech world) that it’s normal for the markets to hover every few years in a range like we’re in today. Then without notice they can suddenly “break out” of the trading ranges to go onto new highs or break down for a while.
The hard part during times like this is being patient. It’s very important to remember this is part of a long term investment strategy. If the markets start to move into a long term downward trend versus a sideways trend, our tactical managed accounts will move to more conservative positions until the storm passes.
If you would like to discuss any of this with Nathaniel, Mary Jo or myself feel free to contact us as at 830-609-6986 or email [email protected].
*S&P 500 Index data sourced from YCharts. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance is no guarantee of future results.
The views expressed represent the opinion of Christian Financial Advisors®. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Christian Financial Advisors® believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Past performance is not indicative of future results. For any discussion of equity securities: Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. For any discussion of taxes: Christian Financial Advisors® does not provide tax advice and encourages you to seek guidance from a tax professional.