A First Foundation Blog

Market Action Update: Revenge of the Bears

The S&P 500 bull market in the United States has finally ended. Beginning March 9, 2009, hitting new record highs on February 19, 2020, and finally ending on March 12, 2020. One of the most hated and reluctant bull runs in history as many investors found reasons to stay in cash after the psychological pain of the Great Financial Recession. 132 straight months climbing multiple walls of worries. The 2009-2020 bull market saw a price return of 400% over 2,756 trading days.

Reasons to sell:

  • Chrysler and General Motors filing for bankruptcy in late March 2009
  • Double dip recession fears
  • The BP oil spill
  • The Flash Crash
  • The European sovereign debt crisis
  • Grexit
  • The run on municipal bonds after Meredith Whitney said 50-100 counties, cities, and towns would default on hundreds of billions of dollars
  • U.S. debt downgraded by Standard & Poor’s
  • The Fiscal Cliff
  • The Tape Tantrum
  • U.S. Government Shutdown (a few times)
  • China hard landing (a few times)
  • Energy crisis
  • Brexit
  • 2016 U.S. election night
  • U.S. / China trade war
  • U.S. Treasury yield curve inverts
  • U.S. / Iran conflict
  • COVID-19

An epic bull run followed by an even more historic reversal, needing just 16 days to flip into a bear market, something not seen since the Great Depression (back when market circuit breakers didn’t exist!). In 2007-2008, it took 188 days for the S&P 500 to correct 20%. March 12, 2020 was historic, remember the date. Some $16 trillion in global market cap value has now been lost, which is greater than China’s current GDP. Even with the carnage that has occurred, the S&P 500 is still about 5.5% above the December 2018 low. Back when markets were pricing in 2-3x rate hikes.

So what are markets currently pricing in? Simply put, fear of the unknown. And lots of it. Fear that COVID-19 stalls company earnings enough to turn into an earnings recession. Which turns into an economic recession. Fear that the oil price war between OPEC and Russia will send the U.S. energy sector into bankruptcy. Which would then spread contagion throughout the credit system and impair financial institutions. Fear that central banks have no more levers to pull. Fear that political incompetence will provide weak fiscal policies. Faith and confidence work in both directions.  

As investors it is always important to remember that panic is not an investment strategy. That “getting in” or “getting out,” better known as market timing, really represents gambling. Gambling on a single moment in time. Investing should always be a process over time. The 10-year U.S. treasury note is currently yielding 0.82%. Inflation historically runs around 2.5%. Locking in a negative real return doesn’t seem all that attractive (nor make any sense). Howard Marks, Co-Founder and Co-Chairman of Oaktree Capital, famously wrote in one of his memos, “in the real world, things generally fluctuate between ‘pretty good’ and ‘not so hot.’ But in the world of investing, perception often swings from ‘flawless’ to ‘hopeless.’”

While fundamentals have taken a backseat to panic selling, we will continue to closely monitor data points and remain strong believers that diversification is one of the most important portfolio strategy tools one can utilize during times such as these. Ballasts such as government bonds, alternative strategies, and gold can help mitigate volatility. As we await fiscal policy response, remember to help do your part in “flattening the curve.”   

As always, we appreciate your confidence in us. Please don’t hesitate to reach out to your wealth advisor for questions. 


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by First Foundation Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from First Foundation Advisors. Please remember that if you are a First Foundation client, it remains your responsibility to advise First Foundation, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. First Foundation Advisors is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the First Foundation Advisors’ current written disclosure statement discussing our advisory services and fees is available for review upon request, or at  Please Note: First Foundation Advisors does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to First Foundation Advisors’ web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Andrew Chan, CAIA, Managing Director of Portfolio Strategy
About the Author
Andrew Chan, CAIA, Managing Director of Portfolio Strategy
Mr. Chan serves on the investment team and is responsible for conducting investment manager research and portfolio construction. As a member of the investment committee, he provides market commentary and investment insights. Mr. Chan’s responsibilities include overseeing client portfolios, calculating risk metrics, conducting the rebalancing of client portfolios, and evaluating the selection of new investment managers. With over 10 years of wealth management experience, Mr. Chan has played key roles across various aspects of investment and wealth management. Prior to joining First Foundation Advisors, Mr. Chan was most recently a portfolio manager at U.S. Trust where, in addition to his daily responsibilities, he served on numerous internal committees including the investment manager committee, the portfolio model committee, and the strategic technology committee. He also served on the in-house strategic consultant committee reporting directly to the President of U.S. Trust. Mr. Chan is a graduate of the Wharton School Executive Program on Investment Management and holds a Bachelor of Arts degree in Business Administration from the University of California, Riverside. He is a Chartered Alternative Investment Analyst (CAIA). Mr. Chan serves on the executive board for CAIA Los Angeles and is the Interim President for the association. Read more