With the stock market hitting new all-time highs last week, we were again reminded in the news that it is "the second longest bull market in U.S. history." But without seeing a comparison with the other modern bull markets, the description doesn't really do this bull justice.
As the table below shows (which lists all the bull markets of the past 60 years, ranked from longest to shortest), it's already more than two years longer than the 3rd-place bull of 1982-1987, and three years longer than the average.
It's also closing in on the second place spot in terms of the total gain achieved from bottom to top.
|Bull Market Began||Bull Market Peak||Life Span (Months)||Total Gain|
|Oct 1990||Mar 2000||114||417%|
|Mar 2009||July 2016 *||88||221%|
|Aug 1982||Aug 1987||61||229%|
|Oct 2002||Oct 2007||60||102%|
|Oct 1957||Dec 1961||50||86%|
|Jun 1962||Feb 1966||44||80%|
|Mar 1978||Nov 1980||33||62%|
|May 1970||Jan 1973||32||74%|
|Dec 1987||Jul 1990||31||65%|
|Oct 1966||Nov 1968||26||48%|
|Oct 1974||Sep 1976||24||73%|
So when you read/hear that this bull is "getting old" or is "long in the tooth," you now have an idea of just how unusual this bull market is. Does that mean it's almost over? Not necessarily. As you can see, the 1990-2000 bull ran a little more than two years longer and reached levels of profit much higher than those we've seen so far from the current bull. So age alone is no indication that the profit party is over.
However, as there have been all along the way, there are reasons for concern. According to The Fiscal Times:
According to FactSet, S&P 500 [second quarter] earnings are set to decline 5.5 percent from last year, for the fifth consecutive quarterly decline. As earnings have stalled but share prices keep rising, the S&P 500's trailing 12-month price-to-earnings ratio has swelled to its highest level since 2010 (19.4x) and is well above its five-year (15.8x) and 15-year (17.6x) averages....
Stocks are incredibly vulnerable. Only 28 stocks in the S&P 500 (less than 6 percent of the index) are at new highs. Less than 72 percent of the stocks in the S&P 500 are even in uptrends.
However, not everyone is downbeat about earnings. From The Chicago Tribune: "Analysts are expecting a sharp rebound [in profits] during the second half of this year....On the positive side, analysts have been encouraged by recent strength in the latest jobs report, and retail sales numbers Friday that suggest Americans are feeling fine about spending money."
Likely of greater significance is the lack of better options than U.S. stocks. From The Washington Post:
Look around the world and the reality is that there simply isn’t a better place for investors right now. Thanks to former British prime minister David Cameron, the European Community will now suffer through a two-year Hamlet-like grappling by the English of how to handle Brexit. The United Kingdom’s economy is in neutral. Meanwhile, the Euro continues to operate as a fiscal hammer lock on the economies of Greece, Italy, Portugal and the other EU countries not named Germany.
China’s economy is propped up by a debt bubble exceeding $26 trillion and counting, and dwarfs in magnitude the subprime debt jamboree our economy saw in 2008. Oil and other commodity prices are at comparatively low levels, hindering growth in places like Brazil, Russia and elsewhere. Japan is caught in a demographically driven deflationary spiral, with an aging population that—if you can believe it—saves too much.
By contrast, our economy is growing at an annual rate of 1.1 percent. Paltry yes, but there are few other places to invest right now that provide opportunities to generate positive returns.
And none of the above takes into account the poor yields being offered by the bond market. The 10-year Treasury bond currently yields only 1.58% while the S&P 500 stock index’s yield is higher at 2.02%.
Yes, the U.S. bull may be "well stricken in years," but as long as the main competitors for investors' money—bonds and foreign markets—look less attractive by comparison, it may continue to be surprisingly vigorous.