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Breaking Down the Melt Up

From the October 2007 stock market peak until the March 2009 trough, the broad market experienced a “bombogenesis” – like melt down. The broad market indices fell 50% or so, the individual sector declines are illustrated in blue on the left side of the above chart. Remember the math, if an investment is down 50% it must go up 100% to recover, tough to do. The above chart illustrates, in red, the percentage gains that were necessary to get back to October 2007 levels. The green illustrates what happened, the remarkable “melt up” we have experienced since March 2009. Even the hard-hit financial sector has recovered. The broad market indices are up about 300%, 400% including dividends! With most equity markets at all-time highs and investors worried about a potential correction, the chart illustrates why, given a reasonable time frame, we should stay invested. Will the good times continue? Let’s look at some of our favorite indicators.

 

Read the full January 2018 Quarterly

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