36 / 84
PERSONAL FINANCE
Bloomberg Businessweek
May 14, 2018
34
ILLUSTRATION BY LIA KANTROWITZ
○ Investors are worried that good news can’t
get better and are looking for signs of trouble
Is the Long
Bull Market
TiredOut?
One of the things that’s been making professional
traders nervous this year: you. Or at least individ-
ual investors a bit like you. In March daily trades
from just two retail brokers—E*Trade Financial
Corp. and TD Ameritrade Inc.—accounted for
more than a quarter of the volume on the New
York Stock Exchange.
Small investors’ recent interest in stockpick-
ing stands in contrast to the long-term trend in a
bull market that’s more than nine years old. For
the most part, Main Street hadn’t seemed all that
interested in Wall Street—investors were gravi-
tating to index funds and exchange-traded funds
that let them ignore stockpicking and just ride
the market. “The individual investor returned in
a big way over the past year,” says Jason Goepfert,
for 401(k) retirement plans to make simple annu-
ities an option. They also changed some regulations
to encourage so-called longevity annuities, which
don’t start payments until you’re about 80 years
old, so they can ofer more generous payments for a
smaller amount of money. Some research has found
that putting as little as 10 percent of a 401(k) balance
at retirement into a longevity annuity could signii-
cantly supplement Social Security.
Still, many employers worry they’ll get sued if the
insurer they choose to ofer an annuity in a 401(k)
gets in trouble. A bipartisan bill in Congress seeks
to give employers some legal protection. Whatever
the outcome of the regulatory battles, Price has a
piece of advice for the industry. “Stop building the
next whiz-bang product,” he says. Insurers should
“think about inding better outcomes for clients.”
—Katherine Chiglinsky and Ben Steverman
THE BOTTOM LINE Americans have a $4 trillion retirement
savings gap. Guaranteed income could stretch the money out—but
people need simpler, less costly options.
○ The portion of
companies that recently
beat earnings estimates
80%
president of Sundial Capital Research Inc. “That
is typically a contrary sign, suggesting a mild neg-
ative for stocks.”
If it looks like the pros are trying to ind the bad
news in a pile of solid economic data, they’re really
just trying to make sense of a market that’s psycho-
logically edgy. It was on his daily subway ride from
Manhattan’s Upper West Side, where he works
in the morning before heading to his downtown
oice, that Donald Selkin started feeling queasy.
Day after day, rallies that looked bulletproof when
he got on the train were gone when he got of.
“That was the moment I thought, ‘This is going to
be a bit of a diicult year,’” says Selkin, chief mar-
ket strategist at Newbridge Securities Corp.
A bull market within spitting distance of being
the longest ever just isn’t what it used to be. Among
traders, the adage to “buy the dip” has become sell
on the pop—that is, use any rise in the market to take
some money of the table, before it drops again. The
S&P 500 has fallen in the afternoon more than half
the time since mid-March. First it was February’s
brief but hair-raising drop, when volatility returned
to the markets. The market rebounded but izzled
in March, when the S&P 500 recorded its irst back-
to-back monthly declines in a year. Now it’s May
and stocks are roughly where they began the year,
despite one of the best earnings seasons ever.
With projected growth of 17 percent coming
into the period, companies were poised for the
best proit increase in seven years. They ended up
doing signiicantly better: Eighty percent delivered
results that beat forecasts, the most in a quarter
century. But companies in the S&P 500 have seen
their shares fall by 0.3 percent on average the day
after reporting results.
Investors have dealt with turbulence before.
There have been at least ive corrections this bad
or worse since the bull market began. But not when
things were going so well in earnings and the econ-
omy. Corporate proit growth has been too robust
to seem repeatable—the buzz-phrase making
the rounds on Wall Street is “peak earnings.”
The realization that something had changed