“Bull markets are like a cruise ship. Once they get moving, they are hard to slow down, hard to stop, and very hard to turn around.” Ryan Detrick, Carson Group Chief Market Strategist
What a ride the past four years have been. If you’ve been following us this entire time, we thank you. We were one of the very few places that was bullish to end 2022, as it was so obvious to everyone else a recession and bear market were coming. Trust me, we took a lot of heat for our optimistic outlook, as you always will when you go against the herd. This now infamous Bloomberg headline sums up just how negative sentiment was this time four years ago. Oh, all our economy did in 2023 was grow faster than China for the first time in a generation.
Happy Birthday
What a ride it has been, with the S&P 500 now up close to 120% from the lows on October 12, 2022. That ended a vicious 25% and 10 month long bear market, one that saw many of the same high flying tech/AI names of today fall 50% or more.
We found seven other bull markets since 1950 that made it to their fourth birthday, and as you can see here, this one is the third best start to a bull market ever for this cohort.
Here are all the bull markets since 1950, and this one is now the 8th longest ever. Even here, more have been longer than shorter and several much longer.
How Long Will This Last?
A year ago right now, we discussed why this bull market very well could have years left. Well, even a year older, this bull market could still have years left.
The bottom line is bull markets are like a cruise ship. Go read that quote again at the top. I’ve been saying this for years now, and the takeaway here is there’s still a good chance this bull continues to surprise.
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Here’s a chart we’ve been sharing for a long time now, and it shows that once a bull market has its third birthday, then the trend is real. You see, we’ve seen other bull markets flame out after a couple of years, but once they hit that third year, they have been hard to stop. Just like a cruise ship moving out at sea.
The last time we saw a bull market get past its third birthday and not make it to five was in the early 1960s. In other words, over the past fifty years, if a bull made it this far, it made it to at least the fifth birthday, and the average ultimate length of the bull markets was eight years. Is this bull only halfway over? We aren’t saying that, but we are saying be open to this bull market moving higher for longer than you think.
Year Five Could Be Another Good One
A year ago right now, we said similar things, and the S&P 500 is up more than 19% since the bull market turned three.
Looking at year five of previous bull markets, only once did we see a bear market during that year (and thus ending the bull market) and that was way back in the early 1960s.
In fact, year five has gained an average of nearly 19%, more than double the average yearly return. We are still formulating our 2027 Outlook, but I think it is safe to say we see another year of above-average returns, and we sure wouldn’t complain if stocks gain close to 20% in the next 12 months.
What really stands out about the above data, though, is how well things did in year five of the two bull markets that were off to a better start than this one’s nearly 120% gain. Year five of the 1980s bull market soared 36%, and year five of the 2010s bull market added another 21.0%. Again, just be open to the possibility of continued gains and even potentially quite strong returns over the next year.
We truly appreciate you reading what our team has to say. For the latest on our views, be sure to watch the latest Facts vs Feelings podcast here. Thank you!
For more content by Ryan Detrick, Chief Market Strategist, click here.
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