Eerily Quiet on the Market Front

While the U.S. stock market tests new highs, and valuations keep rising farther above long-term averages, you may not have noticed something very odd about our current bull market. The last six and a half years have set a record for lowest market volatility, and the past 299 trading days, starting in November of 2016, has set an even bigger non-volatility record. The markets have been eerily quiet for longer than they ever have been before.

To see what this means, look at the first chart, which shows the losses (aka “drawdowns” in professional investorspeak) for stock market investors since January 1, 2011. The blue spaces represent market pullbacks—a euphemism for temporary losses—that a 60/40 (U.S. stocks/U.S. bonds) has experienced over the last six years. Two things jump out at you; first, investors in this very basic portfolio haven’t experienced portfolio losses greater than 5% since September of 2011—more than six years ago. Even spookier is the back end of the chart, which shows essentially zero drawdowns since the end of last January.

The second chart illustrates the longest time periods when the markets remained within 3% of an all-time high, which basically means that there were gains without a significant downturn. The previous record, 241 trading days, was set between late January 1995 and early January 1996, and the chart shows other records going back to 1961. The longest streak, which is still ongoing, is the time period since November 7, 2016.

What does this mean? It’s impossible to predict the future based on this kind of data, but it does indicate that the U.S. investment markets have been behaving strangely, and it suggests that we are long overdue for at least a moderate adjustment. When that will come remains a bit of a mystery, so let’s celebrate our good fortune up to now, and recognize that it won’t last forever!

Stay Diversified, Stay Your Course!

Empyrion Wealth Management (“Empyrion”) is an investment advisor registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. Information pertaining to Empyrion’s advisory operations, services and fees is set forth in Empyrion’s current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at The views expressed by the author are the author’s alone and do not necessarily represent the views of Empyrion. The information contained in any third-party resource cited herein is not owned or controlled by Empyrion, and Empyrion does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Empyrion of the third party or any of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner or investment advisor.

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