What happens after nearly nine years of bull?
Patience, a level head during transition, long-term strategies and short-term restraint are hallmarks of successfully transitioning from a long, bull stock market environment — whether it continues or shifts to a less lucrative bear market, area experts said.
“We’re experiencing the second longest bull market for stocks since 1929,” said Lisa Strohm, president and CEO of The Athena Network in Upper Saucon Township.
“At over 8½ years, many people wonder how much longer the market can climb before we enter a bear market.”
The uncertainties are how much longer stock prices will hold or rise, how much longer buying will remain robust, and when will investors hold or cash out investments based upon gains or potential losses.
Indeed, the timetable for a market shift from bull to bear – when stock prices fall and investors sell – is wait-and-see or anyone’s guess.
“Markets can stretch out longer, [and] I think it’s become a more average market,” said Chris Kim, chief investment officer of Tompkins Financial Advisors, based in Wyomissing.
Kim noted “a big spike” in earnings in the first quarter of 2018 could be another indicator the bull hasn’t finished its run just yet.
“Until you see a correction, there is not a change. Don’t make any drastic portfolio changes yet,” he said.
Kim said stocks continue to remained in demand, though cheap bargains were harder and fewer to find.
“In 2008, we had a lot of macro issues and a huge burden on real estate,” he said of the Great Recession.
NOT THE SAME
Kim said some financial advisers and investors are concerned about high consumer and car loan debt.
“I think we are in better shape fundamentally than we were in 2008,” he said.
“… And it is not the same and the sheer size is different,” Kim said of existing consumer spending.
KEEP GOALS IN MIND
Following a strategic plan with goals in mind can help investors weather market storms and shifts regardless of the type of market ruling the day.
Risk tolerance, investment pacing, timelines and financial goals are factors that should drive the composition of any investment portfolio.
These also should be factors when deciding what investments to make for such areas as growth, income production and capital preservation goals.
Protecting wealth in any market requires long-term vision, clear goals and enough patience to ride out sudden twists or turns, price dips or market jitters.
Strohm said the performance of other assets during a stock market decline depended upon the market and economy in the moment.
She said some investments such as managed futures, government bonds, cash and gold “tend to either hold steady or rise in a stock market downturn.”
Tim Roof, vice president of Valley National Group Inc., in Hanover Township, Northampton County, said investment diversification is important to establish return goals and to help manage risk.
He said a savings strategy could include goals such as retirement, college or large purchases.
Funding retirement should include income for cash flow and a separate portfolio to outpace the rising cost of living and increasing medical care expenses.
“We have found aligning a portfolio’s asset allocation to meet specific objectives can establish reasonable expectations and help with risk management,” Roof said.
HAVE A PLAN
Regardless of bull or bear markets, people should consider how long they’ll work, how much time they have to save and how much they estimate is needed to fund retirement.
“So, it’s important to consider these variables,” Roof said.
“Develop a plan so you may monitor the progress toward your goals.”