Has the Bull Run Its Course?

There’s been a growing concern that the current bull market in US stocks has been the longest in history. (A “bull market” is defined as a market rally that typically can spans months or years. It is declared over when a 20% price drop occurs). The assumption now is that this rally must come to an end soon. This is a dangerously simplistic way to frame the conversation, because it leaves out some very important points about the current bull market:

This Bull isn’t as old or weak as people think. Based on daily market returns, this market rally is the longest ever. But as Blackrock’s research department points out, based on month-end gains, it’s is far from the longest ever:
- Our current bull was born in March of 2009 and is 113 months old. It’s posted a 367% gain during that time.
- The reigning champion bull went 181 months (1946-1961) and grew 946% before giving way to a pullback.
Of course, real bulls might die of old age, but bull markets don’t. 80% of bull markets ended because of an economic recession.
Back in October 2011 the S&P 500 dropped 20% intra-day. That should have constituted the end of the 2009 bull market. However, the end-of-day closing price ended up being down only 19.4%, invalidating the pullback and allowing the rally to technically, still be considered a bull.

The Big Takeaway: With all that said, is there even a point to timing the end of the bull market? Yes, this long-term price rally will probably end eventually. And maybe we’re closer to the end than the beginning. But, when the market pulls back, that pullback will probably end too.

Historically the market has always recovered and made new highs. Even if you knew when it would end, should that affect your investment decisions? Will you let it impact your long-term plan, future income needs or risk profile?

Sources: Source: FactSet, Morningstar Inc, Standard & Poor’s, J.P. Morgan Asset Management, Blackrock