4/19/2019 Weekly Update: The Resurrection
by Zach Marsh on Jun 7, 2019
S&P 500 -0.01%
10 Year Treasury +0.01%
Weekly Update: The Resurrection
In college I always enjoyed authors who employed Christian symbolism in their work—Graham Greene, Walker Percy, and Flannery O’Connor to name a few reliable sources. So, it seems quite natural to me to see this note as an adequate time to highlight resurrections. Two notable ones come to mind at this juncture: the S&P 500 and Tiger Woods. Both, this past week, managed complete reversals from a nadir which appeared terminal.
Tiger stormed to victory on the back 9 of Augusta to claim his first Major championship since 2008. Following that US Open in ’08 Tiger’s domination of golf was undeniable. That ’08 win gave him 5 major wins out of the last 11 majors and placed him within 4 wins of tying Jack Nicklaus for the most major championship wins all-time. Then his career began to roll over. After taking the next two majors off to recover from knee trouble, he failed to win in 2009. He came close in the final major of that year, but 2009 was the first year since 2004 that he failed to win a major. From there a spring storm became a deluge—that’s to say it got a lot worse. Personal troubles dominated headlines, and stories of infidelity, divorce and substance abuse problems sent his career and marketability plummeting. From 2014-2017 he either failed to play or failed to make the cut in 14 out of 16 majors. His career seemed irreparably gone. Then, at the PGA Championship last year, the last major of the year, he finished 2nd and all of a sudden, the impossible seemed possible. Last Sunday that possibility became reality when he slipped on his 5th Master’s green jacket. His career came full circle, and the renaissance or resurrection was complete.
Likewise, this week, the S&P 500 managed to close at its highest level since October 4th of last year. Since the bottom of the stock market in 2009, the S&P has had an uncanny knack for forming ‘V-shaped’ bottoms, where the recovery from sharp down moves is met with an equally impressive sharp recovery. This reflexive dip buying has stunned many naysayers and rewarded many buyers, but it seems the longer it continues the quicker and more violent the recoveries become. Below is an illustration of what I’m describing. This is a chart of the S&P 500 from 2009-present. Notice that the first couple of down turns took slightly longer to reverse, perhaps due to the lack of conviction in an overall bull market resumption following the 2008 disaster. But, as confidence in the bull market increased, the recoveries became quicker and more violent. The most recent one being the most impressive of them all—a recovery highly reminiscent of the 1998 recovery from Long Term Capital Management failure and the Russian devaluation crisis.
As we now sit here today, on Good Friday, the market is closed, and we are left only to wonder what will happen next. Maybe Tiger’s major win will lead to four more, overtaking the Golden Bear for the most ever, or maybe this was his swan song—a final glimpse at a golfing legend before he fades off into the sunset. Maybe this stock market will catapult to further highs, or maybe it too will fade. At this stage we really cannot tell what will pass. Some have faith and some, like Thomas, ask to see His hands. I guess I always liked Thomas, after all one of my son’s shares his name, because Thomas is like all of us: suspicious of most things mysterious.
Have a good weekend.
Thanks for reading,
Zach and Dave
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