How much longer will this Bull Market last? That is the prevailing question around the investment community. The current Bull is 5 ½ years old, and has been very impressive in historical terms. Heading into October, the current Bull Market was the 4th longest in the last 100 years, and still going. Only the Dot-com days in the ‘90’s, Post-WWII, and the Roaring 20’s lasted longer. This current Bull is very much alive and active. Importantly, every one of these Bull Markets established new, all-time highs. We are again in unchartered waters. And that’s ok.
No Bull Market has ever died of old age. It’s always been recession or shocks that put an end to Bull runs. The Roaring 20’s and 90’s lasted nearly 10 years. Then they crashed. But it was excess enthusiasm and recession that put an end to those Bull’s. Unlike those periods of excitement and euphoria, the current Bull Market has lacked confidence and support. There is very little exuberance today, and the little there is, it’s quite rational. Psychology plays a major role in the stock market. Often times it pays to go against the herd. Investor sentiment was a record 62% bullish in 2000, before the bubble burst. The same measurement shows only 35% bullish today, nearly half the number from the exuberant Dot-com days. It’s been a hated, mistrusted Bull. Those that have not participated in the rally are frustrated and angry – there is a large population in that camp.
This mistrust comes as no surprise, since this Bull was born in response to two massive Bear Markets within ten years time. Both the Dot-com Bubble bursting in 2000, followed by the financial crisis of 2008 left deep wounds for investors, and shook confidence to its core. That is precisely why this Bull is so much healthier. The foundation is quite strong. The US economy is growing at a much slower clip today, but it’s growth nonetheless. It is not overheating.
