RESEARCH REPORT: ARIS NETWORK SERVICES (ARIS)
The most recent research report for T11 Capital Management's newest holding ARIS is available below: Download (PDF,...
JULY CLIENT LETTER: THIS THREE YEAR OLD BULL MARKET; UNDERSTANDING FORM AND RHYTHM
What follows is a section from the “Thoughts & Analysis” portion of my monthly letter to investors at T11 Capital. Thoughts & Analysis This Three Year Old Bull Market One of the many issues that investors face in the current environment is their inability to accurately gauge the age of the current bull market. The traditional argument has been and continues to be that the current secular bull market must have started at the 2009 bottom simply because stocks have been moving up since bottoming at 666.79 on the S&P 500 seven years ago. What investors seem to overlooking when they argue that a bull market commences at the point of reversal and subsequent long-term appreciation is context. The context that is being missed in our most recent example is that the S&P 500 had made a low of 768 back in 2003 after the secular top in 2000 to the 18 year bull run that started in 1982. The 2009 “credit crisis” bottom of 666.79 was a thorough retest of the 2003 lows, constituting what was essentially a long-term sideways range for stocks that is typical of the end of a secular bull run. For example, when the Dow topped in 1929, dropping from a high of 386 to 40 in 1932, the subsequent volatile sideways range took place over a span of 25 years, marking multiple starts and stops before a new all-time high and a new secular bull market started in 1954. Those who took it upon themselves to correlate the age of the bull market to the simple act of stocks moving up at that time were sold on the idea that the bull market was 18 years old simply because stocks bottomed in 1932. The truth of the matter in 1954 was that a secular bull market was just being born. A secular bull, by the way, that would triple the value of the Dow over the next 13 years into the 1966 top. Subsequently, a sideways range emerged that saw stocks go nowhere from 1966 – 1981. Along the way there was an initial bottom that took place in 1970 with a low of 627, which surely had market participants reeling after witnessing a near 50% drop from the all-time highs in the Dow just four years earlier. It didn't end there, however, much like the initial low on the Dow in 2003 after the mess leftover from the internet bubble started to mend, that would not be the ultimate low. The markets had one more bearish act in store for investors to completely dissuade them from purchasing equities over the next...