Is This Bull Market Younger Than We’re Giving it Credit For?
- Scott Krisiloff
- March 15th, 2013
If you count the start of the current bull market from March 2009, it’s now getting relatively old by historical standards. According to the guys at Bespoke, the average length of a bull market is 915 days, and as of today, it’s been 1,466 days since March 9, 2009. That makes this bull 1.5 years longer than the average and among the longest of all time.
It might be tempting to get bearish based on this data point, but it’s worth considering that maybe this bull isn’t as old as we think. That’s because by convention a bull market usually ends when the market declines by 20% or more, and while there hasn’t been a 20% decline on a closing basis since 2009, we did have a 21% decline to the intraday lows in 2011.
If you accept that this was a bear market, then it breaks the current bull market into two separate bull phases. The first lasted from March 9, 2009 to May 1, 2011, which is 783 days and just slightly below historical averages. The second phase would have started on October 4, 2011, which was 528 days ago. The two phases were broken up by a 156 day bear market, which is short, but not terribly different from the average length of a bear market.
Ultimately, of course, the market is going to do what it’s going to do regardless of how we count it. But this framework could help explain the environment if this bull market ends up looking much longer than seems reasonable without strong secular growth. In this framework, you might argue that the first phase was pure recovery from a deep recession, while the second phase was the start of a traditional growth/business cycle.
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Scott Krisiloff, CFA is Chief Investment Officer of Avondale Asset Management, a Los Angeles based investment firm, which manages investment accounts for individuals and institutions More.