Stock-exchange pundits like to divide market developments into bull markets and bear markets. The latter describe the phases that equity investors are quite reluctant to remember, namely periods with price declines across the board and by more than 20% on average. The periods in which prices rise across the board are called bull markets.
Since March 9, 2009, global share prices have risen without a fall of at least 20%, thus fulfilling the usual definition of a bull market.
After more than nine years, the question of the life expectancy of such a bull market naturally arises. As can be seen from our "Chart of the Week", our current bull market is now competing with the previous record holder in terms of length. (This uses data for the S&P 500, going back to the bull market that started in May 1970. The picture looks similar for global indices.) According to the usual definition, the longest bull market to date lasted from October 11, 1990 to March 24, 2000, or 3452 days. There could soon be a new record holder. To be precise, the current bull market would have outlasted the previous on Wednesday, August 22, based on the assumption that we are not already in a bear market. That means, if the S&P 500 does not surpass 2873 index points, the bull market already ended back in January 26.
Our "Chart of the Week" also shows that this may not only be the longest bull market, but that it has also performed well in terms of price development compared to its predecessors. This is all the more remarkable as economic growth in the current economic cycle, which also began in 2009, falls well short of previous cycles. However, the corporate sector has adapted better to the weak overall economic development than other sectors. Current share prices are underpinned by comparatively high corporate profits. That's unlike the situation in the late 1990s.
And, as David Bianco, CIO Americas at DWS, notes, the 1990 bear market was at best a small bear with a decline of just under 20%. One could argue that the bull market of the 1990s began after the 1987 crash. According to this definition, we would have to be patient until June 2021 until the current bull market also sets this record.
Sources: Bloomberg Finance L.P., Deutsche Asset Management Investment GmbH as of 8/16/18