A Humble Victory Lap

Market Blog Posted by lplresearch

Monday, March 29, 2021

It has been a little over a year since the S&P 500 Index bottomed on March 23, 2020, and it was certainly an eventful year, to say the least. It’s also been one year since we at LPL Research upgraded our view on equities from market weight to overweight in Road to Recovery Playbook Update believing there had been a shift in the risk-reward dynamic between stocks and bonds.

It certainly was not an easy call, and it was made with the S&P 500 rallying roughly 15% from its low. Little did we know however, that the S&P 500 would stage the greatest one year rally in history. As shown in the LPL Chart of the Day, the rally from the 2020 low eclipsed the rallies from the 2009 and 1982 lows, climbing almost 75% since the low:

View enlarged chart.

Investing is a challenging endeavor, one that even the most seasoned and successful participants need to remain ever vigilant, for Mr. Market is always ready to serve a fresh batch of humble pie—a lesson we always keep in mind.

“Few on the Street were willing to lean into the market turmoil and change their outlook on stocks, but it was a call that paid off for us,” added LPL Financial Chief Market Strategist Ryan Detrick. “Even though we turned out to be on the correct side of history, investing is a ‘what have you done for me lately’ industry, and we have to continue to remain disciplined with our approach.”

Despite the historic rally off the low, we continue to overweight equities in our portfolios, as the backdrop of an expanding economy and favorable monetary conditions should be supportive of stocks over bonds going forward, but we acknowledge that year 2 of a bull market has a way of challenging investors.


This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index and market data from FactSet and Bloomberg.

This Research material was prepared by LPL Financial, LLC.

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