When did the bull market begin, IRL?

Updated: Mar 26, 2021

Just musing on the topic of when the current bull market actually began…

Some investors and many people in the media tend not to understand the concept of secular bull markets and so they date the start of this one to March of 2009. They tell you it’s “long in the tooth” and they count other bull markets that haven’t made it this many years in a row as evidence for why it should end soon.

This is so wrong for so many reasons I can’t even get into them all.

Here are a few:

-Averages are made up of extreme readings. The stock market, on average produces single-digit returns, but in any given year it almost never does the average on the nose. In fact, most positive years for the market are a double-digit gain, as Ben Carlson showed this week. So to say “bull markets are an average of 5 years and we’ve been going up for 7” totally confuses people. Sometimes, on purpose.

-It’s become likely that we are in a secular bull market for stocks. We do not measure secular bull markets from the bear market low of the prior cycle. The 1982-2000 secular bull market is measured from the day in 1982 when stocks finally took out their 1966 high. It had been a 16 year secular bear market until closing above those highs, and stocks never looked back. We do not date that bull market from the lows of 1973-1974 that were the nadir of the prior bear. Nor should we use 2009 as our starting point for the current bull market. 2009 was merely the cycle low of the prior bear, not the starting point of the current bull.

-The actual starting point of the current secular bull market is the spring of 2013, when we broke above the double-top record highs of 2000 and 2007. This means we’re only into the third year.

-I also would like to asterisk the fall of 2011 because the S&P 500 dropped 21% briefly in the depths of that panic, which would restart the count anyway if you were using 2009. This is semantics but important if we’re serious about dating. A drop into 20%+ drawdown, even if it’s brief, means a bear market and the end of the previous bull, if we’re using the generally accepted 20% (which is also meaningless, but it is what it is).

This is what the secular breakout of 2013 looks like, in relation to the breakaway from the prior two peaks between 2000-2007. By this count, the previous secular bear was 13 years (2000-2013), hence the current bull market is 3, not 7, and has a long way to go before anyone can say that it’s gone too far:

Now I want you to go read Michael Batnick’s awesome post about what it was like when the stock market broke into the secular bull market from 1982-2000.

That fall, as in the spring of 2013 when the current one began, things were awfully shaky and scary for market participants. It was only years later that the ’82 breakout could be seen for what it really was – a new dawn after a long period of lackluster returns…

“This week in 1982 marked a major milestone in the history of the stock market. The Dow Jones Industrial Average closed above 1,000- its highest levels in nearly a decade- and it was on the precipice of saying sayonara to a 16-year bear market. A new secular bull market was right around the corner and the S&P 500 would go on to advance 1650% over the next 17 years, or 18.3% a year.”

ANALYSIS:

After the prolific American Bull market of 1982, which lasted till 2000 (from the end of the Stagflation era to the beginning of the Dotcom Bust), the current Bull market in America is considered noteworthy. Though most people incorrectly date it back to 2009 (considering the nadir of the 2000-2013 Bear market as the starting point), the currently-prevailing Bull market began in the spring of 2013.

U.S. stocks are soaring sky-high. The Dow Jones Industrial Average (DJIA) has been reaching all-time highs since 2013, and during this period itself, the S&P500 had briefly risen above the never-seen-before 1.800 mark and has continued to fluctuate in the higher ranges.

Stocks have been rising steadily, with a number of factors at play, such as:-

  1. State of the European Economy

  2. Sustained growth in China

  3. S. Federal Reserves’ growth

The current Bull market is three years old, and is projected to maintain strong ground for a long period.

ADDITIONAL INFORMATION:

DOW JONES INDUSTRIAL AVERAGE

DJIA is a stock market index created by Charles Dow. It shows how 30 large publicly wonder companies based in the US have traded over a standard trading session in the stock market. It is the second oldest Market index

S AND P 500

Standard and poor 500 is an American stock maker index based on market capitalisation of 500 large companies listen on the NYSE and NASDAQ. It is one of the most commonly followed equity indices

BULL MARKET

A bull market is a financial market wherein the prices of securities are rising or are expected to rise. They have certain specific characteristics like:

  1. Optimism

  2. Investor confidence

  3. Expectations of strong results

Negative aspects are:

  1. Difficult to predict

  2. Greater level of speculation

  3. Psychological effects play a major role

SECULAR BULL MARKET

It is a Long term bull market trend. It consists of a series of primary trends- larger bull market and smaller bull market

Example: For prolific bull market in modern American history started at the end of stagflation era in 1982 and ended in 2000 during dotcom burst

3 views0 comments

Recent Posts

See All