The current bull market in US stocks has been called many things from “the most hated bull market in history” to “a triumph of the power of national central banking.” No matter how one chooses to look at it most have to agree that the bull market has been resilient. In fact, just recently the current bull market surpassed the bull market of the 1990s to become the longest ever recorded.
The bull market started in March 2009 when stock prices bottomed during the Great Recession. Since then the market has largely trended upward for the past 114 months, or 9.5 years. However, it should be noted that many analysts define bull markets differently leading to different conclusions about the length of this cycle, the length of the average market cycle, and what it means if anything.
The truth is that the recent market milestone is just another in a long list of market milestones, such as Dow 10,000, that make headlines but have very little real meaning. In reality, market fundamentals such as earnings, earnings growth, cash flow, and debt ratios are far more important in determining whether a market cycle is likely to continue. In addition, economic activity, including consumer’s willingness to continue to borrow to fund spending, can be far more important than a market milestone.
In addition, it should be noted that bull markets do not die of old age. There are typically economic or financial factors that cause a recession or bear market to emerge. As long as these factors are held in check the current market trend may continue. However, it is also important to note that the economy and markets are cyclical. When a market cycle is as long as the current cycle it is easy to forget that this cycle will also end at some point. The challenge is to determine when as the end could come in just a few months or could still be several years away.