This is a question I have been asked multiple times recently. My answer remains the same, "Let's give it some time." Despite the stock market's strong start in 2023, the trending lower inflation, and the strong economy in Q4, it takes more than just a few good weeks and a few solid economic reports to signal a new market cycle.
There are several questions that the financial markets need to address in the coming months, such as, will the economy enter a prolonged slowdown? As the accompanying chart shows, the US Treasury market is still signaling a recession.
It's worth noting that between 1942 and 2021, the average bull market lasted 52.8 months, while the average bear market lasted 11.3 months. The bear market of 2020 lasted just over one month, but the back-to-back bear markets of the early 2000s lasted a painful 2.5 years.1 The current Standard & Poor's 500 bear market was declared on June 13, 2022, when stock prices dropped 20% from their high. Some individuals point out that stock prices started trending lower in January 2022, but that wasn't the beginning of the bear market.
As 2023 progresses, I work will continue to review economic data and company reports to gain a better understanding of emerging trends. I will gather their insights and update you on any information that may impact your specific investments, such as an IRA.
1. CaptiveInternational.com, September 9, 2021. "Playing the odds: Bull vs Bear markets."
2. Forbes.com, November 23, 2022. "When Will the Bear Market End?"
3. The S&P 500 Composite Index is an unmanaged index that is considered representative of the overall U.S. stock market. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.
