A Report Card On Risks

Bob Carey
Chief Market Strategist

Bio
X • LinkedIn

Blog Home

Send Us Your Comments And Questions

RSS Feed

A Report Card On Risks

Posted Under: Conceptual Investing

View from the Observation Deck

The bull market in stocks turns five years old this week (3/9/09-3/9/14). The S&P 500 hit an all-time high of 1859.45 on 2/28/14. From 3/9/09-3/3/14, the S&P 500 posted a cumulative total return of 203.45%.
The current bull market in the U.S. has lasted 1,821 calendar days, as measured by the S&P 500. It ranks as the seventh longest bull market dating back to 1928, according to Bespoke Investment Group.
For the record, the longest bull market lasted 4,494 days, from 12/4/87 through 3/24/00. The S&P 500 posted a cumulative total return of 841.11% over that period.
Today's blog post offers a snapshot of five barometers of various risks. We used a 5-year period to coincide with the current bull market.
Notice that there is little to no change between the most recent data points for the Consumer Price Index, the price of an ounce of gold bullion and the CBOE's Equity Put/Call Ratio relative to their 5-year averages.
There has been a notable increase in the use of margin debt (NYSE). While some might interpret that as an elevation in risk (investors borrowing more capital), we see it as investors being comfortable with the current risk climate.
There is also a notable change in the VIX Index, and it is a positive one. The VIX Index closed yesterday's trading session 24% below its 5-year average of 21.09, which was a bit higher than its 10-year average of 20.15.
Our point today is that risk is relative, and relative to the past five years it doesn't appear to be a cause for concern at this time, in our opinion.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance. The VIX Index (The CBOE Volatility Index^®) estimates expected volatility by averaging the weighted prices of S&P 500 puts and calls over a wide range of strike prices. Past performance is no guarantee of future results.

To Download a PDF of this post, please click here.

Posted on Tuesday, March 4, 2014 @ 3:45 PM • Post Link

Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

Most Current Posts

<<< Newer Posts • Older Posts >>>

Search Posts

MARKET ANALYSIS

Market Commentary and Analysis
•	Market Commentary Video
•	Monthly Talking Points
•	Quarterly Newsletter
•	Market Observations

Subscribe To Receive Email

PREVIOUS POSTS
•	Let’s Wind The Clock Back To 1981
•	The S&P 500 Still Mending The Fallout
•	S&P 500 Earnings Beat Rate On The Mark For Q4’13
•	Now Don't Be Sad Two Out of Three's Not Bad
•	Outlook For European Equities Optimistic For 2014
•	Making Another Case For SMid Portfolios
•	2014 Earnings Snapshot
•	Biotechnology Is Still The Shining Star Of The Health Care Sector
•	Covered Calls May Be Conducive For This Market Climate
•	Taking a Broad Investment Perspective