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February Market Perspectives & WYNTK

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February 12, 2024

The bull market for US stocks that began in October 2022 was re-confirmed on January 19th when the S&P 500 closed and made a new all-time intraday high. For investors, this has been a long-time coming dating back to the very first day of 2022. Since then, 512 trading days have passed since we have been able to celebrate this milestone. I figured this development was cover story worthy and I feel like this might be an appropriate time to insert this timeless quote from the legend himself, Warren Buffett.

As shown below, as of January 19th this bull market is at 464 days old and counting, which is ironically right at the median length for all bull markets since 1928.  To get to the average bull market length, however, this bull will need to last another 527 days (or about 1.5 years), which would take us out to mid-2025.  As the graph below depicts, bull markets have generally been lasting longer and longer as the US economy has gotten more and more developed.

More on this exciting topic is covered in this month’s Market Perspectives giving investors insight of ‘What You Need To Know’. This month we have a lot to unpack in what was a reasonably favourable month for equity investors which followed the ‘everything rally’ to close out 2023. While this month’s publication is lengthy, I think you will find it to be a very easy read as there are lots of graphs and positive aspects that help point to more brighter days ahead for investors.

See attached to enjoy the read.

If you’re crunched for time, here are some key takes:

First Impressions Matter. In the 40 years since WWII when the S&P 500 was up at least 1.5% in January, its median performance for the remainder of the year was a gain of 13.4% with positive returns 82.5% of the time. In all other years, the S&P 500's median gain was 5.7% with positive returns 66.7% of the time.

No Breaks. The S&P 500 has now rallied 21.3% over the last 70 trading days without experiencing even a 2% decline from a closing high. Since 1953, there have been 15 other streaks where the index went at least 70 trading days without a 2% decline. One year after those prior 70 trading day periods, the S&P 500 was up an average of 12.7% with gains 87% of the time.

Earnings Beats are Rallying. 72% of the more than 500 companies that had reported Q4 2023 earnings through February 7th reported stronger than expected EPS compared to a historical EPS “beat” rate of 65% over the last ten years. Stocks that beat EPS estimates have rallied more than 2% on the first trading day following their earnings reports this season, or about 50 basis points more than normal.

Lots of good stuff on the docket and I don’t think I brought up the topic of inflation or interest rates once this month which likely breaks a two-year streak as well! While the landscape of the markets and economy is forever evolving, one thing you can be sure is that you have a committed partner in your corner to help you navigate this uncertain landscape.

I really hope you find value in the content I regularly publish and that you feel a little more comforted especially when the journey gets rocky as it all too often does.

With Thanks. AP

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