This week, the bull market in stocks that began on March 9, 2009, will become, by most standards, the longest bull run over the past 100 years.
Though some people say that the 1990s bull actually was longer or that this bull really started in 2011 or 2013 or 2016, most investors accept that by Wednesday this market will have lasted 3,453 trading days, surpassing the 1990s mega-bull in duration.
| Longest bull markets | ||
| Dates | Length in trading days | Percent gain in S&P 500 |
| 3/9/2009 -?? | 3,453* | 322%** |
| 10/11/1990 - 3/24/2000 | 3,452 | 417% |
| 8/1/1921 - 9/7/1929 | 2,959 | 395% |
| 6/13/1949 - 8/2/1956 | 2,607 | 267% |
| 10/3/1974 - 11/28/1980 | 2,248 | 126% |
| Average of all bull markets since 1921 | 1,596 | 163% |
| Source: S&P Global/CFRA Research | ||
| *Through Wednesday, Aug. 22 | ||
| **As of Monday, Aug. 20 | ||
“The S&P 500 index SPX, +0.28% , which gained 322.3% during those 9 ½ years as of Monday’s close, was also only 16 points away from its all-time closing high of 2872.87, set Jan. 26, so this week may see two records fall. (The Dow Jones Industrial Average DJIA, +0.32% is still more than 800 points off its January all-time highs.)
So, now that we’re on the verge of hitting both those milestones, should we prepare to say goodbye to this most unloved bull market of my lifetime?
Sam Stovall’s call
Not quite yet, says Sam Stovall, chief investment strategist for CFRA Research in New York.
First of all, he told me in an interview late last week, people have constantly underestimated the strength of this bull and the solid fundamentals that drove it higher.
Reported earnings based on generally accepted accounting principles (GAAP) for the S&P 500 have soared an astonishing 1,688% from the 12 months ended March 2009 through the 12 months ending June of this year.
Of course, 2009 12-month GAAP earnings were deeply depressed by the S&P’s $23.25 per share quarterly loss in the December 2008 quarter, when banks and other businesses took big write-offs because of the financial crisis.
But it’s still many times higher than the earnings gains of 162% during the 2003-2007 bull and the 134% increase in the 1990s bull, he said.
The S&P has just had two consecutive quarters of nearly 25% year-over-year earnings growth. Meanwhile, Howard Silverblatt, senior industry analyst for S&P Dow Jones Indices, points out that annual sales growth, a great barometer of companies’ underlying strength, may top 11%. And operating margins — at a record 11.6% — are way above the 20-year average of 8%. All good.
And there’s not a lot of bad news on the horizon, either, adds Stovall, geopolitical and trade concerns notwithstanding.
“Bull markets don’t die of old age,” he told me. “They die of fright. And what they’re most afraid of is recession.”
Three signs recession isn’t near
He uses three indicators to see if a recession is coming: a sharp decline (averaging 25%) in housing starts, a drop in consumer confidence (down by an average 9%), and a yield curve that’s inverted by 60 basis points. That means the two-year Treasury TMUBMUSD02Y, +0.64% would yield 0.6 percentage points more than the 10-year note TMUBMUSD10Y, +0.86% , a sign that bond investors fear recession.
In July, according to the Census Bureau, housing starts fell 1.4% from the same month in 2017. The University of Michigan’s latest Index of Consumer Sentiment was off 1.5% from last August. And as of Friday, the 10-year Treasury yielded 26 basis points more than the two-year, still in positive territory.
“None of those indicators right now is of concern for me,” said Stovall. “We could have a pullback or a correction, but I don’t see a bear market because I don’t see a recession.”
What he sees instead is the best period for stocks coming up, based on the four-year presidential election cycle, following the worst six months of that cycle, which will end in October. “The 12-month period from Oct. 31 of the midterm election year through Oct. 31 of the following year, the market was up 18 of 18 times, rising an average of 16.7%,” he told me.
Sooner or later, that perfect record will end. Geopolitical and trade conflicts or currency turmoil in emerging markets may rattle investors, and if, as I expect, Democrats retake the House of Representatives this fall, gridlock in Washington would return with a vengeance.
But if Stovall is right, the underlying strength of the economy and earnings will make this bull market’s record run last a lot longer and push its price a lot higher before its inevitable end.