Record Bull?August 15, 2018 -
Categorized in: IAG News
Life can be a game of inches. Sometimes mere seconds separate us from safety or tragedy. Or keep us from setting new records.
Our current bull may become the longest bull market on record within the next few weeks. This is true if you believe the current longest bull market on record lasted from October 12, 1990 to March 24, 2000 – a total of 2,388 trading days.
Except maybe that isn’t the longest bull market currently on record.
It is commonly accepted that a bull market ends when it declines by 20%. If you adhere to this strictly, you could make the argument that the longest bull market actually lasted from December 12, 1987 through March 24, 2000 – a total 3,109 trading days.
Why the difference? Rounding down by .08%.
To accept October 12, 1990 as the start of the current record for a bull market, you must accept a 19.92% decline (not technically 20%) on October 11, 1990 as the end of the bull born in 1987.
Yes, the S&P 500 closed at 295.46 on October 11, 1990. A full 20% decline from its previous high would have required it to close at or below 295.16 to technically end the bull market that started in 1987.
So as this bull controversy is debated (perhaps only in this blog), the more important focus needs to be not on how long the current bull market has been but on when it will end.
We currently see little evidence that our current bull is headed for its demise within the near-term. Corporate earnings are strong and the current administration has created a more favorable business environment with lower taxes and fewer new costly regulations.
But the market tends to start pricing in bad news before it shows up in the headlines. We fully expect that to be true when this bull starts to decline in health. It all starts with a little dip that doesn’t quite bounce back to full strength.
Our disciplined investment process is designed to put time on your side, so that when this bull market dies (and a bear market is born), your long-term investments have the time to ride out the bear.
Quote of the week:
Benjamin Graham, “The intelligent investor realizes that stocks become more risky, not less, as their prices rise – and less risky, not more, as their prices fall. The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs) you should welcome a bear market, since it puts stocks back on sale.”
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