Historical Bull Market Gains

Happy new year everyone,

I have been reading some commentaries which argue that since 2009, stocks have seen abnormal gains as a result of monetary policy, and that another crash like 2007-09 is imminent. However, the current bull market is only abnormally large if you count short-term plunges like 1987 as bear markets, or count large rallies within bearish phases (i.e. 1974-76) as bull markets.

Excluding such countertrend moves, I find the following bull and bear markets from 1920 to the present:

Bull markets:

1921-1929, 1932-1937, 1942-1946, 1949-1960, 1962-1966, 1982-2000

Bear markets:

1929-1932, 1937-1942, 1946-1949, 1960-1962, 1966-1982, 2000-2009

The current bull market is almost 6 years old now. On the list of bull markets above, any bull market that lasted more than 5 years had a total duration of at least 8 years. There are three previous bull markets that meet this criteria: 1921-1929, 1949-1960, and 1982-2000.

For each of those bull markets,  I calculated the Dow’s percentage gain from the preceding bear market low to the high of the same quarter of the year six years later.

1982-1988: 182%
1949-1955: 183%
1921 – 1927: 211%

Median: 183%
Average: 192%

Current bull market: 180%

So, for a bull market lasting more than 5 years, the current bull market is historically normal.

 

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