On the occasion of the S&P 500 bull market run becoming the longest in history, we asked our portfolio managers, traders, analysts and more to comment on what they remember most about the extraordinary events and roller-coaster ride to the top that brought us to today.
Here’s what they said:
The bull market started from the rock bottom....
“It was surreal, watching the screen, seeing the headlines cross the tape, you couldn’t really believe what you were reading. Long standing institutions closing their doors, worries about possible runs on the banks, massive layoffs at every firm we dealt with.… All stuff that I had never seen before in my career.
I witnessed Black Monday in 1987 very early in my career. That was a one-day rout that made everyone uncomfortable for a while, but was over quickly. The GFC went on for a very long time and it changed how people think about the stock market. I hope to never see anything like it again in my lifetime. Certainly, as March and April of 2009 rolled around, the pessimism was so profound, we knew it was time to start redeploying some capital. It’s been amazing to watch this market climb the proverbial wall of worry ever since.” Patricia Nesbitt, Senior Vice President, Equities (GWLIM)
"It’s people stories I remember most; traders and brokers working at places like Bear Stearns when things were falling apart around them. The financial crisis took away livelihoods, and people you dealt with for years, people you built a relationship of mutual respect with…they were suddenly not there anymore. It’s humbling to see firsthand the uncertainty that people in this industry can face when markets turn. It forces you to remember that it’s a privilege to have a career managing money for investors and motivates me to try my best every day
The value of risk management and due diligence is the greatest lesson I’ve taken away from managing money over the last 10 years. People assume that as a portfolio manager, I only think about finding the next big winning stock. But idea generation is only one part of the investment process and arguably, not the most important. I think just as much about avoiding ‘losing/bad’ stocks and preserving capital as I do about finding the next great stock pick. It comes down to defining your process and having the discipline to execute day in, day out” Rob Lee, Vice-President, Equities
“As a portfolio manager we were so close to things. I remember attending global analyst conference calls scheduled on emergency basis for Sunday afternoons as major financial firms were collapsing – I can’t remember that ever happening before or since.
Every day another piece of the global financial system was breaking down and there were no precedents from which you could draw on – we were figuring it out at the same time as the events unfolded. It wasn’t easy and no one was immune to hits along the way, but we also learned some valuable lessons and reaffirmed how imperative it is in this business to step back, assess, and remain disciplined.” Ron Hanson, Chief Investment Officer
“We were all feeling beaten down by an endless stream of bad news and falling stock prices. I remember this day because I was giving a presentation to financial advisors. One gentleman declared that nothing I said could make him believe that things would get better – the crash was irreversible and would only go down from here. For me, that was the moment I started to believe we were close to the bottom. When people expect only the very worst, any sign of something better can spark a turnaround.” Nancy Harris, SVP, Marketing and Business Development.
"Dire headlines came fast and furious in 2008. Bond market liquidity dried up. Investors had lost all faith in credit quality. Markets overreacted again and again during that period, and if you played into that you could easily (and repeatedly) have realized huge loses. It became more important than ever to believe in your fundamental credit research and stick to your investment thesis. I remember going through my analysis again and again. It was rough ride, but we rode out the crisis relatively well because of it.
I remember everyone saying that rates could only go down so far, and that negative interest rates couldn’t happen...and then several countries nominal yields moved into negative territory (some still to this day), and savers are still struggling with ultra-low rates. Never say never!” Janet Salter, Vice-President, Fixed Income
“The financial crisis brought along the most intense days of my career. As a trader, I watch market charts all day. I had been through Black Monday and the tech bubble, but I had never seen such huge market swings and degrees of volatility; there were 4, 5, 6% intra-day market moves. It taught me to never be complacent, you have to watch your orders and trades closely, because things can change on a dime and you never want to be caught on the wrong side.” Carol Fewer, Trader, Equities
The introduction of emergency bailouts and extraordinary monetary stimulus programs…
“This wasn’t ‘the cure’ for a broken system. We knew that, but there is a point when a doctor simply needs to keep a patient alive, so they will still be around to withstand the eventual medicine.” Ruth Ann McConkey, President, GLC Asset Management Group
Europe in crisis mode…
"Having grown up in the “Celtic Tiger” boom years in Ireland and then witnessed the subsequent housing market collapse, the European sovereign debt crisis was of particular interest to me beyond its capital market implications. The EU “experiment” has always had its doubters given the significant cultural differences between the disciplined, conservative savers in countries such as Germany and the free-spending peripheral countries in the south. These differences came to the fore during this period.
The thing I remember most is how Greece, a country with a population of less than 12 million people, became the centre of the world’s financial markets. Greek bond yields were on everyone’s radars – an unimaginable concept before that. We’ll probably never know how close we came to “GREXIT” but this episode sorely tested the EU’s resolve.” Andrew O’Brien, Manager, Investment Strategy
“In late 2009 I was working in London, England, when the Greek debt crisis hit. At first, none of us were particularly concerned: Greece accounted for only 3% of Euro-area GDP. What could possibly go wrong? Well, everything, as it turned out. Interest rates and unemployment spiked. Greek Government Bonds went from being a sovereign interest rate product, to a high-risk credit product. As market participants looked more closely at what they had missed, concerns spread to Portugal, Ireland, Italy and Spain, (the cruelly nicknamed PIIGS).
This week Greece finally exited its bailout package, but the country’s stock market remains down 60% from pre-crisis levels, debt is above 170% of GDP and unemployment remains above 20% (youth unemployment is at 43%). It was a big lesson in not being too complacent regarding the importance of financial strains and the risks of contagion. When I look at the financial strains in Turkey today, and see its GDP is only 5.7% of Euro-area GDP, I wonder… What could possibly go wrong?” Mark Hamlin, Vice-President, Fixed Income
When Trump wins the election…
“We knew if Trump won, the markets would get hit fast. So the morning after the election, Brent (Joyce) and I were in the office before sunrise and when markets opened we had a communication ready. The markets dropped first thing…but by 10a.m. they started moving back up. I couldn’t believe it – investors (and this bull market) were way more resilient than I expected.” Christine Wellenreiter, VP Marketing and Communications
An old bull that is still running…
“What stands out to most to me is how stable markets have been in the last couple of years, despite all the noise and events that have taken place. We often heard from others how crazy and volatile markets had been, but as we continued to watch standard deviations fall – we knew it just wasn’t the case. As interest rates rise and markets turn I think the pendulum in the passive versus active management debate will swing back towards active management and active managers will be sought out for strong security selection that can mitigate volatility and preserve capital for longer-term wealth.” Brandon Hutchison, Assistant Vice-President, Portfolio Solutions
What’s your bull market memory? Find us on LinkedIn and Twitter and share what you remember most. We’d love to hear from you!
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This commentary represents GLC’s views at the date of publication, which are subject to change without notice. Furthermore, there can be no assurance that any trends described in this material will continue or that forecasts will occur; economic and market conditions change frequently. This commentary is intended as a general source of information and is not intended to be a solicitation to buy or sell specific investments, nor tax or legal advice. Before making any investment decision, prospective investors should carefully review the relevant offering documents and seek input from their advisor.