How Long Can Stocks Continue to Go Up?
Jerry Davidse places the current bull market in historical context, comparing its length and cumulative return with 100 years of S&P 500 data and with the Nasdaq's run during the 1990s internet boom. He is careful to frame the comparisons as historical perspective rather than a prediction, reiterating the value of a disciplined, rebalanced investment strategy.
Jerry Davidse places the current bull market in historical context, comparing its length and cumulative return with 100 years of S&P 500 data and with the Nasdaq's run during the 1990s internet boom. He is careful to frame the comparisons as historical perspective rather than a prediction, reiterating the value of a disciplined, rebalanced investment strategy.
Key takeaways
- The current bull market's cumulative return and length are compared with 100 years of S&P 500 bull market history for context.
- Longer bull markets in history have historically continued well beyond current levels, though this is not a prediction of what happens next.
- The video compares today's AI-driven market to the Nasdaq's performance during the internet boom of the late 1990s.
- Because no one can consistently forecast what markets will do next, a disciplined, regularly rebalanced strategy is emphasized over prediction.
Hi friends. After the stock market has performed well for an extended period, it is natural to wonder how much longer it can continue. Let's look at some historical data together to place the current bull market in perspective.
This table shows every S&P 500 bull market over the past 100 years. Our current bull market is highlighted. According to this data, the current bull market has produced a cumulative return of about 112%, which is approaching the long-term average return of 17.8% for all bull markets. It has also lasted 1,329 days, approximately 270 days longer than the average bull market. At first glance, that might suggest this bull market is becoming old.
However, the longer bull markets in history tell a different story. Excluding the current period, the nine previous bull markets that lasted more than 1,000 days continued on for an average of approximately 2,380 days. Their average cumulative return was nearly 225%. If the current bull market were simply to reach these historical averages, it would have approximately 1,050 additional days to run and still have significant gains to come. This is not a prediction. Historical averages do not tell us when this bull market will end or how much further the market will rise. They simply remind us that a market is not necessarily approaching the end because it has already performed well for so long.
Another popular comparison is to look at market returns during the internet boom in the late '90s versus our current AI-driven market. This chart compares the Nasdaq index returns from the day the modern internet was born in December 1994 versus the returns since ChatGPT was released in November 2022. As you can see, the market performance has been nearly identical up until now. The internet era went on to produce substantial additional gains before the technology bubble ultimately burst in March 2000. Today's market could follow a similar path or it could be completely different. No one can consistently forecast what will happen next.
This is another reason why we believe it is so important to have a disciplined investment strategy that is aligned with your long-term financial plan and is regularly rebalanced as the market moves up or down from here. At Presilium, we remain optimistic about the future while preparing our clients' portfolios for a wide range of possible outcomes. Thank you and I look forward to talking with you next Friday morning.
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