John Husselbee

Why comparing bull markets is baseless

John Husselbee

As the S&P 500 hits its longest ever bull run today (3453 days, outstripping the previous record that stretched across the 1990s), many investors are understandably focusing on this record and asking if history might signal how much further it could go.

For me however, comparing bull markets is largely baseless. There is little common ground between the two recent periods beyond duration: the 1990s run was grounded in the TMT (telecoms, media and technology) bubble while the latest growth can point to several factors behind the curtain, notably QE (quantitative easing).

It is also worth considering the magnitude of growth: in the US’s previous purple patch, the market’s total return was 543% (US dollar terms) whereas the current run has seen growth of 385%. The gap is wider in the UK with returns of 209% (sterling terms) since March 2009 versus 635% during its prior bull run from September 1987 to the end of 1999.

Given this, we would dismiss the idea that bull markets can simply die of old age. We believe equities have something left in the tank although after nine years of growth, some areas are clearly more attractive than others.

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Wednesday, August 22, 2018, 12:25 PM