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Bull Markets Require Perspective

Posted by nexvucapital on May 25, 2013

We highlight the SPX Index since 1960 to put today’s “Bull Market” into perspective.

The key point is that “timing” from the perspective of returns is more about your length of stay than your entry point when looking at the SPX. To use the game of poker as a metaphor, picking your entry point into this market is as random as the cards you are dealt off the deal and is not something over which you have the greatest degree of control.

SPX1960s

Now, let’s look at this from the perspective of those who bought “the top” of the market on the following historic dates:

  • the market top of 119.87 in 1973
  • the market top of 140.52 in 1980
  • the market top of 170.80 in 1983
  • the market top of 335.89 in 1987

Each of these entry points was met with an immediate and significant correction and thus it can be concluded that these entry points were less-than optimal. But that conclusion is relative to the length of stay in the SPX Index and the rate of return as per the following chart:

Presentation1

Now,  let’s look at our original chart from the perspective of those who bought “the top” of the market on the following recent dates:

  • the market top of 1527.46 in 2000
  • the market top of 1561.80 in 2007
  • the market top of 1588.85 in Q1, 2013

As with our Historic Tops above, the first 2 of these entry points were met with an immediate and significant correction and thus it can be concluded that these entry points were less-than optimal in the short-term but we suggest one needs to use the SPX historic performance highlighted in the Matrix above and play the cards you have been dealt accordingly.

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