S&P 500

robertbanking

Hello you very intelligent and amazing people. I do hope your day is going well. I cannot believe it is almost December already.

I kindly wanted to ask about the S&P 500 and the US economy at the moment. I know since January 2022 the market has been classed as in a bear market. Estimates state that bear markets last around 9 months, some could be longer. I please wondered what are peoples thoughts for a recovery, i know interest rates are high and bringing down inflation at the moment. Does anyone kindly please have any thoughts on when it may start recovering? Further is there any technical indicators that might help gauge when a turnaround might happen please? I would be so thankful if anyone could kindly reach out with some advice or opinions. 

Thank you so much for your time and support. Take care and i do hope you enjoy the rest of your day. Best wishes. 

eskbanker

robertbanking said:

I kindly wanted to ask about the S&P 500 and the US economy at the moment.

Two very different things!

robertbanking said:

I know since January 2022 the market has been classed as in a bear market. Estimates state that bear markets last around 9 months, some could be longer.

And some are shorter, of course....

robertbanking said:

I please wondered what are peoples thoughts for a recovery, i know interest rates are high and bringing down inflation at the moment. Does anyone kindly please have any thoughts on when it may start recovering?

Many would say it's already started - the S&P 500 is up over 10% from its mid-October low - but of course the key thing is that nobody knows whether it'll continue rising or decrease again.

robertbanking said:

Further is there any technical indicators that might help gauge when a turnaround might happen please?

There are all sorts of technical analysis indicators that might help (but then again they might not) - there are some posters on here who believe in all that, who will no doubt share some charts with candlesticks and breaches of rolling averages and so on....

robertbanking

Thank you very much eskbanker for your thoughts on this i am really very thankful. I appreciate you leaving your thoughts, i understand that even technical indicators may not be helpful as nobody can predict what may happen. Thank you very much that was very helpful.  

dunstonh

 I know since January 2022 the market has been classed as in a bear market. Estimates state that bear markets last around 9 months, some could be longer.

There are never estimates on how long these things will last.  Just historical information on how long previous ones lasted.  Each one is different but very many turn out similar.

I please wondered what are peoples thoughts for a recovery, i know interest rates are high and bringing down inflation at the moment. Does anyone kindly please have any thoughts on when it may start recovering?

The S&P 500 is an index of companies that does not necessarily reflect the US economy.

Statistically, most negative periods start recovering after a single dip.     A smaller, but significant number, have a double dip.    An even smaller number have a treble dip..      We have had a second dip and are in the recovery stage of that.     Statistically that means the odds that this is the recovery is higher than the odds that there will be a third dip but of course, we don't know.

Technology stocks went down around 90% just over 20 years ago.   This time around its 40-50% so far.  The bottom with those may not be there yet. 

One of the major concerns for UK investors investing in US equities is that falls in the US markets havent been seen here because of the rise in the dollar against all currencies and the fall in sterling.      When that starts to go the other way, and if you assume US equities will recover in that period, you may well find that you do not get any growth on your S&P fund despite the S&P rising.    This is why you are seeing increasing numbers place some of their US equities allocations into currency hedged versions.

Also, historically, global equities and US equities tend to take it in turns over the cycles. i.e. the one that was best in one cycle is usually not in the next.   There is no science to that. It is just one of those things that plays out more often than not.    A lot of the reason can be down to currency cycles. Sterling is more stable (in relative terms) to global currencies but tends to cycle more aginst the dollar (the same can be said for many countries).

This is why you see messages on here and elsewhere that you should not invest 100% into the S&P500.   For some of the time you would be very happy you did. But you will also have extended periods when it is just a really bad place to be.

robertbanking

Thank you very much dunstonh for your advice on this it was really appreciated. In particular i found it very useful your comments on a recovery usually happens after a first dip, but there could be up to three dips. So statistically at the moment the odds of recovery are higher, i found this very interesting, thanks very much for sharing this advice. I also agree do not put 100% of your investments into the S&P500, thank you very much for your feedback. Hope you enjoy the rest of your day.   

Beddie

On another recent thread, people were talking about not timing the market, invest in a tracker etc. And now on here there's a different thought that one should try to time the market and avoid certain indices at certain times.

https://forums.moneysavingexpert.com/discussion/6403434/active-vs-passive/p1

Not saying anyone is right or wrong, but It's interesting to read differing angles.

Coincidentally, I am migrating to passives for some of my investments and have just put a lump into.... an S&P 500 tracker! You can therefore expect it to shortly plummet   

eskbanker

Beddie said:

On another recent thread, people were talking about not timing the market, invest in a tracker etc. And now on here there's a different thought that one should try to time the market and avoid certain indices at certain times

I certainly wasn't advocating any attempt to time the market and don't believe that @dunstonh was either!  Which comment(s) did you read that way?

Millyonare

The renewed strength in the UK pound (GBP) has wiped out almost all S&P 500 gains since its low in Sep-Oct 2022 (unless you hedged it).

NoviceInvestor1

With the US making up 60% + of a global tracker, what is the reason to buy a US index over a global one?

Why concentrate a bet on a single country?

adindas

NoviceInvestor1 said:

With the US making up 60% + of a global tracker, what is the reason to buy a US index over a global one?

Why concentrate a bet on a single country?

Many of big companies on S&P500 nowadays, especialy tech companies are actually global companies. Their revenues are not just from the US but from all over the world.

Prism

adindas said:

NoviceInvestor1 said:

With the US making up 60% + of a global tracker, what is the reason to buy a US index over a global one?

Why concentrate a bet on a single country?

Many of big companies on S&P500 nowadays, especialy tech companies are actually global companies. Their revenues are not just from the US but from all over the world.

The S&P 500 is surprisingly US focused, with around 70% of revenue coming from the local market. Its pretty diverse across sectors though