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A New High Is Needed to Confirm this Milestone

Bad parenting skills reward the task before its completion. So too the stock market prepares to celebrate a milestone that has the possibility of never being reached. This bull market was born on March 9, 2009. Only if it sets a new high before falling 20% from the previous high set on May 21, 2015, it will celebrate its seventh birthday. Should a 20% stumble occur first, this birthday crown will be revoked like Jim Thorpe’s Olympic medals.

Assuming this 12th bull market since WWII is still alive, it has lasted 84 months, vs. the average age of 56 months. It rose 215% through its May 21, 2015 all-time high, vs. an average of 144% for all bulls, and it required 49 months to recoup all that was lost in the 2007-09 bear market vs. the average 25 months needed to retrace the prior bear markets’ steps.

Post-WWII S&P 500 Bull Markets

This statistic is a bit misleading, however, since it is making an oranges-to-tangerines comparison. The bear of 2007-09 was a mega-meltdown, since it fell more than 40%. Only the bear markets of 1973-74 and 2000-02 are also classified as mega-meltdowns. The subsequent bull markets of 1974-80 and 2002-07 required 70 and 56 months, respectively, to get back to breakeven. So we see that this bull market took much less time to reach equilibrium than did the prior mega-meltdowns.

So there you have it. Investors are preparing to celebrate this bull market’s seventh birthday. In addition, early indications point to the possibility of celebrating year eight. Yet this is one of the few times in which history might not even be a good guide (for we know it’s never gospel), due to the limited number of times bull markets have made it this far. So like maritime explorers of old who have entered rarely sailed waters, it might be wise to ignore prior observations and proceed with caution by relying on frequent soundings for safe passage.

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