Riding the rally – the baby bull after its first year

András Cserháti
Senior Product Manager

As the smoke clears after blowing out the candles, will the rodeo continue or is it time to head for the abattoir?

It’s hard to believe, but the bull market rally celebrated its first birthday in recent days. Almost exactly one year ago to the day, on 6 March 2009, America’s S&P 500 stock index hit a 12-year low, reaching the “diabolical” level of 666.79 points. The index thus took a life-threatening plunge from its peak of 1576.09 points on 11 October 2007, and although it survived, the impact was no less painful as it saw its value shrink by 57.69% overall. From March 2009 until today, however, entirely the reverse has occurred: the S&P 500 Index has increased by 71.77%, the S&P MidCap 400 Index has risen by 95.11% and the S&P SmallCap 600 Index by 97.01%.

While we must admit that this sounds very good indeed, and that the aforementioned percentage increases are impressive, any investor who preferred stocks in companies with a high level of capitalization, and who bought them at their peak at the given time, is still languishing some 27.33% down at the S&P 500’s current level of 1145.37 points. Of course we also needed to avoid panicking because any investor who, at the sight of the huge declines of recent times, got out of the equities market around the low point and has only later dared to venture back into it will now be feeling less happy still.

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