It used to be that the last couple of weeks in August were slow ones for investors. Well, not this year. Neither the double whammy of Michael Cohen’s pleading guilty and Paul Manafort’s conviction, nor the escalating economic problems in emerging markets (Venezuela and Turkey) could keep stock market indexes from reaching new highs.
Investors brushed aside those concerns and instead focused on record earnings growth and corporate profitability. According to FactSet, for Q2 2018, the blended earnings growth rate for the S&P 500 is nearly 25 percent—which will likely mark the second highest earnings growth since Q3 2010 (34 percent). It’s hard to argue with higher stock prices when taking those results into account. At the annual gathering of economists and wonks in Jackson Hole, WY, Fed Chair Jerome Powell noted “the economy is strong...and most people who want a job are finding one.”
Whether or not last Wednesday marked the longest bull market ever at 3,453 days (there are some who noted that there were moments in 1990, 1998 or 2011 that rob this bull of the longest title), there is no denying that if you held the S&P 500 from its March 9, 2009 low, you would have seen a more than 320 percent return. Even if you started investing at the top of the last bull market in October, 2007, if you adhered to a diversified portfolio and didn’t need your money during the recession, you have been amply rewarded.
Like the waning days of summer, before the reality of back to school and winter loom, it’s easy to think that it all may come crashing down soon. That doesn’t mean you need to do anything. In fact, it’s really fine to savor the moment and be happy that we are here.