Fisher Investments Editorial Staff
Market Cycles

Bottoms Up!

By, 03/15/2010

Story Highlights:

  •  To date, global stocks are up 77.4% from their March 9, 2009 low, and US stocks have risen 73.8%.
  • Similar to stocks' performance over the past year, we've witnessed the telltale bounce forming the upside of the "V" across economic components, here and abroad.
  • Many fear we've come too far, too fast—but bull markets last a while.

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Tuesday (March 9th) marked the one-year anniversary of the global bear market bottom. As the dark days of late 2008 gave way to 2009, many believed the outlook for the future was bleak. Wall Street as we knew it had been dismantled, credit markets remained frozen, bank stress tests and possible nationalizations loomed, economic data continued to sink, and markets plummeted with seemingly no end in sight—few could imagine the upside the rest of the year would hold. But impossible as it seemed to many at the time, the bear market finally gave way to a new bull, as bears always do. To the surprise of those bracing for another Great Depression, the recovery—in both stocks and the economy—has been far swifter and stronger than most anticipated.

To date, global stocks are up 77.4%* from their March 9, 2009 low, and US stocks have risen 73.8%.** Consistent with past recoveries, some regions have outperformed while others have lagged, but on the whole, capital markets have staged an impressive run—and the V-shaped recovery we anticipated has come to fruition, and continues today. True to form, the economy closely trailed stocks—equity markets began their recovery in March, and the economy followed suit months later.

Similar to stocks' performance over the past year, we've witnessed the telltale bounce forming the upside of the V across numerous economic components, here and abroad. US real GDP growth has staged a good run off its Q1 2009 bottom, recovering above even the positive growth rates of the middle part of the past decade. Eurozone industrial production is also exhibiting strength—the January month-over-month gain was the largest on record (20 years), and brings the measure back into the black for the first time in almost two years. Japanese trade figures—exports and imports alike—fell off significantly in the latter part of 2008. But that fall has been nearly mirrored on the upside since. And Emerging Markets are keeping pace with—and indeed surpassing—their developed counterparts. For example, as of January 2010, India's industrial production was up 16.7% year-over-year, bolstered by surging capital goods production. We could continue to list data—major and minor, from domestic and foreign sectors and industries. All of our economic problems might not yet be solved, but evidence overwhelmingly points to sustainable recovery taking hold.

Many fear we've come too far, too fast. But investors can take heart—bull markets tend to last a while. Stocks might not maintain the meteoric pace of the past year—in fact, as fundamental forces converge and the market cycle matures, we expect stabilization of growth. But it looks like the V is carrying us right back toward normal expansion. Nothing new about that.

Sources: Bloomberg. *MSCI World **S&P 500

 

 

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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