Unloved Bull Markets

Introduction

On March 9, 2009, the stock market hit bottom after a seventeen-month agonizing bear market. Six months earlier, Bear Sterns and Lehman Brothers, two prestigious investment banking firms on Wall Street, collapsed under the weight of subprime mortgages. General Motors was facing bankruptcy and seeking a government bailout. Unemployment was 8.7% and racing to 10%. GDP had been negative for two quarters, including a stunning negative 8.5% quarter-to-quarter drop during the fourth quarter of 2008. Out of that setting, the bull market began. From the low on March 9, 2009, through February19, 2020, the Standard & Poor's (S&P) 1500 Index gained 530.12%, meaning if an investor had the courage to invest $1.00 at the bottom and hold eleven years, $1.00 invested would have grown to $6.30. As impressive as that is, many investors did not participate. Rallies and bull markets are often disguised.

On Monday July 13, 2009, I was on CNBC TV “Squawk on the Street” with Erin Burnett; Matt Nesto, who was substituting for Mark Haines; and another guest, Dan Deighan of Deighan Financial Advisors. Figure Intro.1 shows the S&P 1500 Index from December 31, 2008, through April 30, 2010. The arrow points at July 13, 2009, the day of the interview. Just prior to the interview the rally took a brief pause late June and early July.

Erin:	How do you position yourself? On the bullish side or the bearish side? Whether you go for a cataclysmic collapse or slow bleed?
Matt (after Mr. Deighan ...