As the current bull market is now 93 months long (since 1970, the average bull market has lasted 56 months), the question naturally arises whether a market correction is due.
Putting this question in perspective, since 1970, there have been 8 “troughs” in the MSCI World Index returns (a “trough” being defined as market bottoms after declines of at least 20%). A majority of these troughs (5 out of the 8) have been associated with recessions (1973-1974. 1980-1982, 1990-1991, 2000-2001, 2008) and double-digit earnings declines.
Notice below the 5 market troughs that experienced associated recessions and double-digit earnings declines. Currently for 2019, global earnings are forecasted at 5% and GDP forecasts are 1.5% for developed markets and 3.4% for emerging markets. The conditions for a 20% decline in the global market do not seem baked in. This bull market could continue – assuming we do not experience any global shocks.
DISCLOSURE: The opinions expressed herein are those of DCM Advisors, LLC (“DCM”) and are subject to change without notice. This material is for informational purposes only and is not financial advice or an offer to sell any product. It should not be assumed that the investment recommendations or decisions we make in the future will be profitable. All investment strategies have the potential for profit or loss. Information was obtained from third party sources which we believe to be reliable but are not guaranteed as to their accuracy or completeness. DCM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about DCM including its advisory services and fee schedule can be found in Form ADV Part 2, which is available upon request.