"The Longest Bull Market of All-Time?"

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Rowan Oak
Posts: 177
Joined: Mon May 09, 2016 2:11 pm
Location: Yoknapatawpha

"The Longest Bull Market of All-Time?"

Post by Rowan Oak » Mon Aug 06, 2018 9:21 pm

In two weeks we’ll see headlines that we’re in the longest bull market of all-time. Whether you think the bull market starts at the lows or at new highs, remind yourself that we had two resets, because the articles certainly won’t.
The Longest Bull Market of All-Time?

by Michael Batnick
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

david1082b
Posts: 369
Joined: Fri Jun 09, 2017 12:35 pm

Re: "The Longest Bull Market of All-Time?"

Post by david1082b » Mon Aug 06, 2018 10:10 pm

The CAPE ratio is as high as it’s ever been with the exception of 1929 and 2000.
This looks wrong. 1997 to 1999 saw very similar or higher numbers as well. It was above the current number at the start of every month of 1998 for example:
Current: Aug 6, 2018 33.13

Dec 1, 1998 38.82
Nov 1, 1998 37.37
Oct 1, 1998 33.77
Sep 1, 1998 33.53
Aug 1, 1998 35.42
Jul 1, 1998 38.26
Jun 1, 1998 36.80
May 1, 1998 36.95
Apr 1, 1998 37.27
Mar 1, 1998 36.29
Feb 1, 1998 34.71
http://www.multpl.com/shiller-pe/table?f=m

A bit disappointing seeing MB promoting this fallacy, no data presented to support the argument, unlike the bear market data which has a load of charts.

User avatar
Rowan Oak
Posts: 177
Joined: Mon May 09, 2016 2:11 pm
Location: Yoknapatawpha

Re: "The Longest Bull Market of All-Time?"

Post by Rowan Oak » Thu Aug 09, 2018 10:01 am

Convincing argument this bull market started in the spring of 2013 not March 2009.

https://youtu.be/ASq1-Tj7KgY
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

User avatar
nedsaid
Posts: 9919
Joined: Fri Nov 23, 2012 12:33 pm

Re: "The Longest Bull Market of All-Time?"

Post by nedsaid » Thu Aug 09, 2018 10:25 am

Rowan Oak wrote:
Mon Aug 06, 2018 9:21 pm
In two weeks we’ll see headlines that we’re in the longest bull market of all-time. Whether you think the bull market starts at the lows or at new highs, remind yourself that we had two resets, because the articles certainly won’t.
The Longest Bull Market of All-Time?

by Michael Batnick
I remember the 1984-1999 bull market. That lasted sixteen years or so, we are in about year 10 on this one.
A fool and his money are good for business.

Leesbro63
Posts: 5394
Joined: Mon Nov 08, 2010 4:36 pm

Re: "The Longest Bull Market of All-Time?"

Post by Leesbro63 » Thu Aug 09, 2018 10:28 am

With regard to stock valuations, there is this article from today's WSJ, making the case that valuations are NOT off-the-chart-high:

https://www.wsj.com/articles/valuations ... _lead_pos3


"Despite another robust corporate earnings season, the S&P 500 has inched up just 1.5% over the past three weeks as simmering trade tensions and signs of slowing growth at big technology companies sapped investor confidence. Those issues have helped drive valuations down to their lowest levels of the year, even with the broad stock-market index hovering just 0.5% shy of its January high.

The S&P 500 trades at 18.8 times earnings over the past 12 months, a basement valuation that is lower than February’s trough of 21 times earnings, according to FactSet. At the S&P 500’s peak in January, the index traded at nearly 22 times earnings, well above its current level.

Strong corporate earnings are making stocks look less pricey than they did before. Companies in the S&P 500 have posted double-digit profit growth for the past three quarters to help earnings catch up with the S&P 500’s 7% advance this year. For the latest quarter, profits are on track to rise 24% from a year earlier, the best pace of earnings beats since 2008, according to FactSet."

User avatar
nedsaid
Posts: 9919
Joined: Fri Nov 23, 2012 12:33 pm

Re: "The Longest Bull Market of All-Time?"

Post by nedsaid » Thu Aug 09, 2018 10:34 am

Leesbro63 wrote:
Thu Aug 09, 2018 10:28 am
With regard to stock valuations, there is this article from today's WSJ, making the case that valuations are NOT off-the-chart-high:

https://www.wsj.com/articles/valuations ... _lead_pos3


"Despite another robust corporate earnings season, the S&P 500 has inched up just 1.5% over the past three weeks as simmering trade tensions and signs of slowing growth at big technology companies sapped investor confidence. Those issues have helped drive valuations down to their lowest levels of the year, even with the broad stock-market index hovering just 0.5% shy of its January high.

The S&P 500 trades at 18.8 times earnings over the past 12 months, a basement valuation that is lower than February’s trough of 21 times earnings, according to FactSet. At the S&P 500’s peak in January, the index traded at nearly 22 times earnings, well above its current level.

Strong corporate earnings are making stocks look less pricey than they did before. Companies in the S&P 500 have posted double-digit profit growth for the past three quarters to help earnings catch up with the S&P 500’s 7% advance this year. For the latest quarter, profits are on track to rise 24% from a year earlier, the best pace of earnings beats since 2008, according to FactSet."
I have noticed this too. Both forward and trailing P/E ratios have been coming down. It would be tempting to say that the market is looking pretty good here, almost tempted to put a "buy" on the market. The $64,000 question is whether or not recent strong earnings and economic growth are sustainable. Larry Swedroe pointed out that profit margins are at or new all-time highs and that capital and not labor has been rewarded. Now that wages are starting to go up maybe there will be pressure on margins. Interest rates on the short end of the yield curve have been going up and this probably has a role in P/E contraction as well. There is an argument and counter argument for everything.
A fool and his money are good for business.

Leesbro63
Posts: 5394
Joined: Mon Nov 08, 2010 4:36 pm

Re: "The Longest Bull Market of All-Time?"

Post by Leesbro63 » Thu Aug 09, 2018 10:40 am

Isn't it always that way? :wink:

chisey
Posts: 157
Joined: Mon Apr 16, 2007 10:47 am

Re: "The Longest Bull Market of All-Time?"

Post by chisey » Thu Aug 09, 2018 10:50 am

Leesbro63 wrote:
Thu Aug 09, 2018 10:28 am

The S&P 500 trades at 18.8 times earnings over the past 12 months, a basement valuation that is lower than February’s trough of 21 times earnings, according to FactSet. At the S&P 500’s peak in January, the index traded at nearly 22 times earnings, well above its current level.
18.8 has to be using future earnings estimates, not past 12 months. Using trailing 12 months it's in the neighborhood of 24 or 25, which is definitely on the high side. It's where we were in early 2008 and where we spent most of 1998-2003. Prior to 1998 it was almost never that high, and only around market peaks.

As an aside, the difference between trailing and forward numbers is instructive as to the optimism of the "experts." Depending on whose estimates, it implies that the next 12 months' earnings need to be 25-35% higher than the prior 12 months' to justify current prices. Even if that happens in the near term, is that anywhere near sustainable?

User avatar
FrugalInvestor
Posts: 4797
Joined: Fri Nov 07, 2008 12:20 am

Re: "The Longest Bull Market of All-Time?"

Post by FrugalInvestor » Thu Aug 09, 2018 11:13 am

It doesn't matter to me. There is nothing in my plan requiring action as a result of where the market is (or isn't) at any particular time. The only thing that matters to me is where my asset allocation stands (and I'm even a little loose with that because I've learned that doing less is typically less likely to do damage than doing more). All this bull market, CAPE, leading, trailing, times earnings, PE ratio, etc. stuff is just more meaningless noise.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

Dottie57
Posts: 3978
Joined: Thu May 19, 2016 5:43 pm

Re: "The Longest Bull Market of All-Time?"

Post by Dottie57 » Thu Aug 09, 2018 11:17 am

Rowan Oak wrote:
Thu Aug 09, 2018 10:01 am
Convincing argument this bull market started in the spring of 2013 not March 2009.

https://youtu.be/ASq1-Tj7KgY
Interesting. I started paying attention in 2016, so missedwhat the guy is talking about.

2015
Posts: 1715
Joined: Mon Feb 10, 2014 2:32 pm

Re: "The Longest Bull Market of All-Time?"

Post by 2015 » Thu Aug 09, 2018 12:49 pm

FrugalInvestor wrote:
Thu Aug 09, 2018 11:13 am
It doesn't matter to me. There is nothing in my plan requiring action as a result of where the market is (or isn't) at any particular time. The only thing that matters to me is where my asset allocation stands (and I'm even a little loose with that because I've learned that doing less is typically less likely to do damage than doing more). All this bull market, CAPE, leading, trailing, times earnings, PE ratio, etc. stuff is just more meaningless noise.
+1

financeperchance
Posts: 53
Joined: Thu Nov 02, 2017 11:15 am

Re: "The Longest Bull Market of All-Time?"

Post by financeperchance » Thu Aug 09, 2018 1:06 pm

lol how quickly we forget there was a bear market just a couple of years ago:
https://money.cnn.com/2016/02/12/invest ... index.html
https://www.usatoday.com/story/money/ma ... /84658858/

This current bull market is only 2 years old.

I know the last bear market was in 2016, which feels like ages ago, but it's not THAT long ago.

financeperchance
Posts: 53
Joined: Thu Nov 02, 2017 11:15 am

Re: "The Longest Bull Market of All-Time?"

Post by financeperchance » Thu Aug 09, 2018 1:15 pm

Just to add to my previous, I think it's the fact that the bear market was from mid 2015 to mid 2016 that we forget that it ever happened. We instead tend to focus on calendar years.

But if you define a bear market as a drop of 20% or more from the high, then we are only two years into the current bull market.

TomCat96
Posts: 489
Joined: Sun Oct 18, 2015 12:18 pm

Re: "The Longest Bull Market of All-Time?"

Post by TomCat96 » Thu Aug 09, 2018 1:33 pm

There's going to be disagreement as to what constitutes a bull and bear market. But I think the point that piques the general sentiment is that it feels like we've gone awhile without a major crash.

Twenty percent drops are not particularly dramatic events if they occur over long periods. This is especially the case where recovery occurs shortly after. But the sting of 2009 still burns vividly in all of us who had significant exposure.

So not using the academic definition of bull and bear market, but by going on a more generalized intuition, ambiguous as that may be, it feels like the last time we had a catastrophic heart wrenching crash was 2009. Are we overdue?

Let's ignore for a moment that there is no such thing as "overdue" in statistics and random distributions of returns. People have been debating the overdue-ness of a crash on this site for the past few years now, window dressing their sentiments in the form of analysis and various citations.
So let me address the underlying sentiments of threads that keep pushing the idea that it's been a long bull run.

Twenty percent drops, and corrections can occur at any time. In fact they have occurred during the "bull run" from 2009 till now. But if you're asking the more emotional question of the next heart wrenching soul destroying market crash will occur, there is a common idea that such market crashes are preceded by mania.

"Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria."

The last market that died in euphoria was the cryptocurrency market. Everyone remembers the mania in the bitcoin market a few months ago I take it.

But absent such mania in the stock market, or in the related real estate markets, there's no impetus for a massive market crash. If you're going to see a drop, you're going to see it in the form of technical bear markets, and 10% drop corrections--boring, not particularly memorable events.

harvestbook
Posts: 428
Joined: Sat Mar 18, 2017 7:12 pm

Re: "The Longest Bull Market of All-Time?"

Post by harvestbook » Thu Aug 09, 2018 3:47 pm

If the 2000 and 2008 crashes had been long, meandering declines and lingering bear markets instead of generational, dramatic events, not as many people would be bracing for another generational crash. Just another form of recency bias.
I'm not smart enough to know, and I can't afford to guess.

User avatar
willthrill81
Posts: 5046
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: "The Longest Bull Market of All-Time?"

Post by willthrill81 » Thu Aug 09, 2018 3:51 pm

financeperchance wrote:
Thu Aug 09, 2018 1:15 pm
Just to add to my previous, I think it's the fact that the bear market was from mid 2015 to mid 2016 that we forget that it ever happened. We instead tend to focus on calendar years.

But if you define a bear market as a drop of 20% or more from the high, then we are only two years into the current bull market.
:thumbsup

The current bull market is only a couple of years old.
In any case, according to the Ned Davis Research criteria, there have been 37 bull markets since 1900 with an average length of 25 months. Those criteria also conclude that we currently are in bull market that began on Feb. 11, 2016, which means that the current bull market is 27 months old — insignificantly different than the historical average.
https://www.marketwatch.com/story/the-l ... 2018-04-27

Further, it doesn't matter how long the current bull market is. Bull markets don't die of old age. Research has shown that the length of a bull market does not change the likelihood of a bear market beginning.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Post Reply