By Noel Randewich
(Reuters) – A savvy investor who managed to time the start of Wall Street’s bull market a decade ago – and hold on since then – would now be sitting on a handsome windfall.
Born in the ashes of the financial crisis, Wall Street’s oldest-ever bull market turns 10 years old on Saturday, with the S&P 500 tripling in value and amply rewarding investors who have owned funds tracking the index for that period.
The S&P 500’s post-crisis low close was 676.53 points on March 9, 2009. During the previous session on March 6, it touched an intraday low of 666.79, which came to be know as the “devil’s low.”
On Friday, the benchmark index closed at 2,743.07, down 2 percent for the week.
Extraordinary efforts by the U.S. Federal Reserve to foster an economic recovery from the financial crisis through asset purchases and rock-bottom interest rates have provided essential support for the market during its bull run. Sweeping corporate tax cuts passed by President Donald Trump fuelled market gains for much of 2018, before a steep sell-off starting in September that raised fears the bull run was coming to the end.
GRAPHIC-Wall Street’s bull turns 10 (https://tmsnrt.rs/2NOg2f3)
Investors who bought and kept shares in cosmetics retailer Ulta Beauty on March 9, 2009, would have seen their investment gain nearly 7,000 percent during that time, more than any other stock on the S&P 500. Netflix is the second biggest performer over the past decade, up over 6,000 percent.
At the other extreme, telecommunications company CenturyLink has slumped almost 50 percent since the start of the bull run, more than any other stock still in the S&P 500.
The S&P 500 has turned in a handsome annualised return of 15 percent during the bull market, with the consumer discretionary and information technology indexes each up about 20 percent annually.
But timing is everything. An investor who bought the S&P 500 a year before the bull market began would have had to weather steep losses, trimming the S&P 500’s annualised return since then to 7 percent and narrowing the consumer discretionary and information technology sectors’ annualised gains to 12 percent.
GRAPHIC-Annualised growth (https://tmsnrt.rs/2Ca4i1y)
With analysts slashing estimates for U.S. banks and other multinationals, the S&P 500 traded at a low-point of 10.6 times expected earnings in December 2008, before Wall Street’s bear market ended and turned the corner. It is now trading at 16.5 times expected earnings, according to Refinitiv.
After dropping 19.8 percent from its record high close on Sept. 20 through Dec. 24, the S&P 500 has slowly recovered and is now just 7 percent short of regaining that high.
GRAPHIC-S&P 500 since the start of the bull market (https://tmsnrt.rs/2NUy3bC)
(Reporting by Noel Randewich; Editing by Alden Bentley and Tom Brown)