Are you aware that, from 1871 to 2009, the stock market was in a bear market for 40% of that time? By definition, the market was in secular "bull" mode for 60% of the time. Interesting, huh? I grew up thinking that the stock market was a great place to lose money. (It still is!) I remember the bear market that lasted from 1967 to 1982. That's 15 years of mostly down price action. The reason: inflation was rising that entire time and, toward the end of the period, interest rates rose up to 14% by 1981.
The chart below (click to enlarge) shows the inflation-adjusted S&P index and denotes secular bull and bear markets. Notice, that we're still in a secular bear market since 2000. The S&P 500 index has recently hit all-time nominal highs but not so after adjusting for inflation. Technically speaking, this means that we've been in a secular bear market for 14 years, going on 15 years! Maybe the bear market is about over given that duration?
Or, was the March 2009 crash bottom the start of a new bull market? Time will tell.
|S&P 500 Historical Composite: Inflation-Adjusted Secular Highs and Lows|
Here's another chart of the inflation-adjusted S&P 500 from 1871 shown with a linear regression trend line and variation from that trend line:
|S&P 500 Composite Shown with Regression Trend Line|
From Doug Short at Business Insider:
"Since that first trough in 1877 to the March 2009 low:
"This last bullet probably comes as a surprise to many people. The finance industry and media have conditioned us to view every dip as a buying opportunity. If we realize that bear markets have accounted for about 40% of the highlighted time frame, we can better understand the two massive selloffs of the 21st century."
- Secular bull gains totaled 2075% for an average of 415%.
- Secular bear losses totaled -329% for an average of -65%.
- Secular bull years total 80 versus 52 for the bears, a 60:40 ratio.