How Bull Markets Past and Present Stack Up

As of March this year we have approached eight years in the current bull market. In other words, since March 9, 2009 we haven’t seen any stretch of time where the S&P 500 has declined more than a 20% from the market high.

During this eight-year period we’ve had plenty of pullbacks (a 5% decrease from the market high) and corrections (a 10% decrease from the market high).  However, the market continues to rise as we enter the eighth year of this stretch.

How much higher will this bull market go and when will it end? It’s a question that can’t definitively be answered, but looking back at the history of bull markets can give us some context on where we currently stand. (For more, see: The Bull Market Turns Eight.)

May 1970 - January 1973

This bull market lasted just under three years and the S&P 500 increased 74%.  During this time President Nixon abandoned the gold standard implementing an economic policy that became known as the Nixon Shock.

October 1974 - November 1980

This bull market lasted a little over six years and the S&P 500 increased 126%.  This was one of the highest inflationary periods in the U.S. which drove a lot of the stock market growth. During this time period inflation averaged around 9.5% per year and the Consumer Price Index rose about 66%.

September 1982 - September 1987

This bull market lasted five years and the S&P 500 gained 229%. During this time period President Reagan introduced Reagonomics, which cut taxes and deregulated banks and lending.

December 1987 - March 2000

This was the longest bull market in history lasting 12½ years. The S&P 500 gained 582%. This era, at least from about 1995 – 2000, is infamously known as the tech or dotcom bubble. The usage of the internet spiked in the ‘90s as well as the price of any company that had a dotcom at the end of its name. (For more, see: The Market's Long Upward March: Correction Due?)

October 2002 - October 2007

This bull market lasted almost six years and the S&P 500 gained 102%. Real estate was one of the major drivers in the growth of the economy and the stock market during this time period. This real estate boom was fueled by debt through easy lending practices, sub-prime mortgages and mortgage-backed securities.

March 2009 - Present

The current bull market we are in is a little over eight years old and has seen a 247% gain in the S&P 500. Like other bull markets of the past, this growth has been fueled in a large part by economic policy. Quantitative easing was introduced to inject money into the economy, interest rates were lowered to spur lending for individuals and growth for businesses, and investors have piled money into stocks due to the low yield fixed-income products currently offer.

Since 1970 we’ve had nine bull markets. The average length of these bull markets is about 55 months or 4½ years (not including our current bull market) with an average total increase of 165%.

Our current bull market has almost doubled the average length and the S&P 500 has risen about 50% higher than the normal increase. However, no matter how “long in the tooth” this current bull market seems, it hasn’t come close to what investors experienced in the late 80s and all through the 90s. This current bull market has achieved about 40% of the increase achieved in that 12½ year bull market and needs to run 4½ more years to match the length.

Although the length and gain of the current bull market isn’t unprecedented, the circumstances and economic policy that has fueled this market may be. This bull market could run for another four to five years like it did in the 90s. It could also flip the switch and head the other direction tomorrow, we just don’t know.

In all reality it shouldn’t matter. The cycle of bull and bear markets is inevitable. If your portfolio is positioned correctly according to your risk capacity and return requirements, you’ll be well positioned to take on more of the recent bull market or the inevitable bear market to come. (For more from this author, see: Why Your Portfolio Underperforms the S&P 500.)