The most hated bull market in history



The week of Marc Lambrechts | The biggest bull market in history on Wall Street? Some people doubt this long life. Others say that the market has been largely artificially boosted. Who to believe?

That made the headlines of the financial press (including L & # 39; Echo): Wall Street has the longest bull market in its history. The 3,453-day increase on Wednesday had a negative impact on 3,352 days from the previous bull market, which ran from October 1990 to March 2000.

Since the lows reached on 9 March 2009, the Standard & Poor's 500 benchmark index, which fell by 57% during the 2007-2008 crisis, has not yet experienced a 20% correction and therefore the market has a bear market.

"The longest bull run in the history of the stock market, congratulations America! " tweeted (rather modest) US President Donald Trump. So everyone is "happy"? Well no. Some have questioned the foundations of this long life record.


The definition of a bear market is ultimately quite subjective. Why 20% decrease and not 25%?

The figures from the previous record would simply be biased. Obviously everything depends on the position where the cursor is. According to some, the precedent of the bull market does not go back to 1990, but to the period after the 1987 stock market crash. If that is the case, no record of sustainability was struck this week. And it takes us another thousand days to defeat him.

Where does this difference of opinion come from? In fact, the S & P 500 share index lost 19.92% in the course of 1990. By closing, we reach the 20% that determine the famous bear market.

A fairly similar problem is mentioned for the later period. In the course of 2011, the S & P 500 fell by 19.39%, only a hair width of the bear market. And if we follow lessons in session (intraday), the fall even reaches 22%.

So, do you think experts who meet in one case and not in another?

In any case, the definition of a bear market is quite subjective. Why 20% decrease and not 25%? Because someday someone on Wall Street has decreed it and that has become the rule.

Doping on the stock market

What is certain is that the current bull market is not the most appreciated. Some even talk about the most hated bull market in history …

The market is actually swollen with hormones. It was artificially stimulated by the ultra-expansionary monetary policy of the US central bank (which is gradually being reversed). And more recently, it was Donald Trump's tax measures that put the bull in the saddle.

However, it has been thought several times that the bull market had come to an end and that the bull would eventually be able to blow. He has had several serious health warnings during his lifetime. The last was in January-February, when the stock market index fell by 10% in two weeks in the wake of a sudden increase in volatility. But this week the index returned to its historic highs earlier this year.

In historical terms, this bull market is not the most efficient. The increase in the S & P 500 index reached 320% since March 2009, while in 1990-2000 the increase was more than 400%. With regard to the current average annual return, it is 16.5% against an average of 22% in other bull markets.

The question now is whether this market still has sufficient fuel to make progress.

In the stock market it is common to say that bull markets are born in pessimism – this was the case in March 2009 in the middle of a crisis – and died in euphoria. Today we can not really talk about euphoria on the stock market. It is much weaker anyway than at the beginning of the year 2000, just before the burst of the technological bubble.

Logically, this "bull market" dreams to celebrate its tenth anniversary on March 9, 2019. This will inevitably revive the debate on the foundations and the record life.


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