Stock Market Update

Mack Courter |

February 2015 marks the 40th month of the bull market in U.S. stocks.  What’s so special about 40 months?  It’s the average length for a bull market in America since 1835.

As I’ve often said before, there are seasons in the investment markets, just as there are seasons in weather patterns.  Here in Pennsylvania, we enjoy four weather seasons (although many of us aren’t enjoying the current one).  In the investment markets, there are two—bull (up) markets and bear (down) markets.

Domestic stocks, represented by the S&P 500 Index, have had a good run as you can see.  Since the last bear market ended in October 2011, it’s up about 92 percent.  This is slightly less in magnitude than the average bull which clocks in at 110 percent.

Source: eSignal Data

Of course, just because it’s reached the length of the average bull doesn’t mean that it has to end today.  Matter of fact, of the thirty-two bull markets NONE have ended at exactly forty months. 

What is interesting is what has happened after forty months.  There have been a total of fourteen bulls that have lasted longer.  Of these, five (35%) have ended within the next 12 months.  Nine (64%) have ended within 24 months.  Five have gone on longer than two years. 

You may recall the “good old days” back in the 1990’s.  That bull market lasted for 93 months.  Believe it or not, that’s actually not the longest on record.  That distinction belongs to the one in the Roaring 20s, which blissfully went on for 97 months. 

It’s important to note that a lot of people think the last bull market started in March 2009, not October 2011.  Check out the following chart and you can see why.

Source: eSignal Data

I don’t disagree with them from a big picture perspective, but I define a bear market as a 15 percent decline or more, which means that the last one ended in October 2011.       

At this point, you may be thinking, so what are you trying to say Mack?

  1.  I am NOT calling an end to this bull market.
  2. BUT, the best days are probably behind us. 


Most importantly, what will you do when this bull market ends?  You need to begin preparing now.  I’ll cover more about this in another post.