Before losing to the Kansas City Royals on September 15th, the Cleveland Indians won 22 straight Major League Baseball games! Think about that for a moment. Doing anything 22 times in a row is tough enough let alone winning 22 professional baseball games. The streak will go down in the baseball record books as the most consecutive wins in Major League Baseball history and the second-longest winning streak … second only to the 1916 New York Giants' streak of 26 wins and 1 tie in 27 games.
The Indians' streak remind us of the U.S. equity market these days. As of Friday September 22nd, the S&P 500 Index eclipsed 2,500 but closed at a new all-time high 36 times this year, which is very impressive. Returning 13.4% since the first of the year, the index is on track to have the strongest year-to-date performance since 2013. According to market statistician and author of the Irrelevant Investor blog, Michael Batnick, the S&P 500 Index (shown in white in the chart below) has been above the 200-day "moving average” for 314 days, going back to last June. Moving average is the simple average of the 200 previous index closing prices (shown in green below). Other than an episode in November, the index has not even come close to "testing" or going below the moving average since then:
As investors and Tribe fans, we hope both continue roaring ahead, but know all good streaks inevitably come to an end. Despite the strong momentum in the S&P 500 Index, we have zero confidence in the S&P 500 Index never going down again. It will, and it may go down hard into another bear market (commonly defined as a greater than 20% drawdown from a previous index high). And despite the Cleveland Indians' record-breaking winning streak that came to an unfortunate end, we have complete confidence in them winning the World Series this year!