Market Beat: The longest bull market in history
The current bull market that we’re in is the longest in history. As of this writing, the bull market is 3,458 days old and that is a new record.
The old record was from the bull market that ran from Oct. 11, 1990 until March 24, 2000. That bull market lasted about 114 months and the market gained 418 percent. The annualized rate of return in that bull run was 19.0 percent.
The bull market that we’re in now started on March 6, 2009, when the S&P 500 bottomed out at 666.79. Today, Monday, Aug. 27, the S&P 500 has hit a new record high of 2,898.25.
The S&P 500 has more than quadrupled since the market bottom in 2009 and the economy still looks strong here. At some point in time we will have another recession and recessions are usually accompanied by bear markets, although the market typically turns up before the recession officially ends, because it is a forward-looking mechanism.
A bear market is defined as the market making a drop of at least 20 percent and the downturn lasts for at least six months. A correction is defined as a fall of at least 10 percent. The last bear market that we had started on Oct. 9, 2007 and lasted until the market bottomed out on March 6. The S&P 500 dropped 56.8 percent during that 17-month period. That bear market was caused by the housing bubble which led to the Great Recession which was the worst recession since the Great Depression.
The bear market that occurred before that was due to the dot-com bubble bursting and the Sept. 11 terror attacks in New York. That bear market lasted from March 24, 2000 until Oct. 9, 2002, during that time frame the S&P 500 dropped 49.1 percent at its bottom.
It’s interesting to note where the terms bull and bear market originated.
In the early days of California, the old timers would capture a California grizzly bear (before they became extinct) and they would round up the meanest, orneriest bull that they could find. They would put the bull and bear into an arena and they would have a gruesome fight.
The spectators would bet on the outcome. The bull would strike up at the bear with its horns and the bear would strike down at the bull.
So, bull markets go up and bear markets go down.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.