The market has had a few good months in a row. By all accounts, it appears that we made a market low on October 30th, which was most likely the start of a new secular bull market. The next question we might ask ourselves is if we have moved too far too fast. The easiest way to answer this is to use history as our guide.

 

If we look at the last 12 bull markets since 1949, we get a pretty good idea of what to expect. The chart below shows the cumulative returns of past bull markets during the first two years after stocks bottom. If we assume we made a market bottom on October 30, then this current bull run is actually below average with respect to the past 12 market bottoms. This gives us some comfort, even if the market returns have been skewed to the mega caps. Hopefully more companies will start to participate.

 

Source: Edward Jones as of March 01, 2024

 

Bonds are another story…

 

As you can see from the chart below, bonds have had their worst and longest drawdown in the last 50 years. Bonds started going down in August of 2020 and have been either negative or flat for the past 4 years. Bonds go up when interest rates go down, and most economists believe that interest rates will begin going down in 2024. We believe this as well. If bonds start to contribute to an already upward-moving stock portfolio, then we are setting up for a reasonable 2024. Let's hope this plays out!!

 

Source: Charlie Bilello

 

I've also included a piece from our CIBC Economics team entitled "Rotten to the Core”.

 

As always, if you have any questions, please feel free to give us a call at any time.

 

Have a great weekend.

 

Milan