The Dice Man Cometh
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Of all the arguments put forth by market pundits and talking heads about the coming end of the current bull market, the weakest is that it is “long in the tooth.” I get this argument, but it doesn’t make sense. Other bull markets have lasted far longer than this one.
Take 1877-1907 for instance. That one went on for 29 years. More recently, the great bull market of 1982-2000 lasted for 18 years. By comparison, the current bull market is only 10.7 years old – still a relative youngster in historical terms. Is that an argument for going all-in at this point? No, because that would be just as dumb as going all-out, simply based on the age factor.
Bull and bear markets since 1877
Before we get to the full history of bulls and bears, let’s look at the averages. The data prior to WWI is suspect, because the stock market was mostly railroad and steel stocks. The first Ford Model T came in 1908 and didn’t reach full production until about 1912. After cars became widely available, the composition of the stock market broadened out considerably.
Average duration of bull markets since 1877 is 15.1 years.
Average duration of bear markets since 1877 is 10.4 years.
Here’s the full record. (This table is from an article by Jill Mislinski published on AdvisorPerspectives.com, January 2, 2020.)
Why this fascination with the age of the current bull market?
Psychologists say that we’re hard wired to look for patterns, and that includes winning streaks. Streaks are fascinating to us. Home runs in a season, Jeopardy winners and all kinds of stock market streaks, including the number of up days or up weeks in a row, or the duration of a bull market.
With every streak, the “faders” come out to bet against their continuation.