A trader works on the floor of the New York Stock Exchange on Thursday, Jan. 14, 2016.Richard Drew/The Associated Press
In investing, as in life, age is just a state of mind.
There is a big birthday coming up for the U.S. bull market, which ranks as the third longest on record. That alone says nothing about the continued longevity of this post-crisis era of equity appreciation. History shows economic recessions, rather than old age, as being the more likely bull killer.
This Wednesday marks the seventh anniversary since investor sentiment officially hit a turning point, bringing an end to a startling selloff that erased almost 60 per cent of the value on the S&P 500 index over a year-and-a-half.
On March 9, 2009, the S&P troughed at 676.53, and has been on the rise, on average, ever since. At 84 months long, this upswing has long surpassed the average bull market lifespan of about 59 months.
Only twice in history have American stocks gone on longer winning streaks – from 1990 to 2000, and from 1949 to 1956, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
Since the market bottomed out seven years ago, the S&P has avoided a 20-per-cent decline from a recent peak, which is conventionally used as the threshold signifying the start of a new bear market. But there have been a couple of close calls. In 2011, the index fell by 19.4 per cent while sovereign debt concerns spread through the eurozone, while Standard and Poor's stripped the U.S. of its perfect credit rating, raising doubts about the U.S. fiscal situation.
The latest global stock selloff brought on by the crash in the energy market, Chinese economic concerns, and the prevalence of negative interest rates, drew down the S&P by as much as 14 per cent. Since mid-February, however, investor confidence has risen as crude oil prices have advanced.
On Monday, the S&P was flirting with closing higher than the 2,000-mark for the first time since early January. That makes for a tripling of the index since the bull market began in 2009. With dividends factored in, that appreciation rises closer to 3.5 times, or close to 20 per cent annualized.
Consumer discretionary has been the top performing sector over that time with an annualized total return of 27.3 per cent. Energy was the laggard, with a relatively paltry 8.1 per cent, per year.
Tim Shufelt