The longest bull market in history in five charts

The US stock market is on its longest bull-run in history. It began on 9 March 2009 and, therefore far, has lasted nine years, five months and 13 days. As of today, it beats the great equities performance of the 1990s .
A bull market is broadly defined as one that rises over fourth dimension without falling more than 20 % from its peak during the period .
plenty of traders working in the markets nowadays will only ever have known rising partake prices .
Since March 2009, the S & P 500, the primary US stock market index, has risen by 323 %, a acquire few could have envisaged after the index plunged 57 % from its extremum in October 2007 during the global fiscal crisis.

On a total retort footing, which includes dividends paid by companies, the index has returned 415 % .
Gains have been made in cattiness of a difficult economic and political backdrop over the past ten. More recently, the view of trade wars, a surging US dollar, rising interest rates and the secession of stimulation by central banks has failed sol far to derail the bullshit .
From its close abject of 676.53 on 9 March 2009 the S & P 500 has risen to 2,862.96 points. It works out to an average rise of 16 % a year .
But while the stream bull market is the longest in history, bigger gains were made during the 1990s. From a close up low of 295.46 on 11 October 1990, the S & P 500 rose 417 % to peak at 1,527.46 on 24 March 2000, or 546 % on a total return basis .

The longest S&P 500 bull markets: 1990s vs the 2010s

stock marketplace level

For information purposes lone. Please remember that past operation is not a guide to future performance and may not be repeated .
reservoir : Schroders and Thomson Reuters Datastream. Data for S & P 500 right as at 20 August 2018 .

What defines a bull market?

A bull grocery store is broadly defined as one that rises over time without falling more than 20 % from its point during the period .
The current bull grocery store for the S & P 500 peaked on 26 january 2018 at 2,872.87, although it registered a higher intra-day degree yesterday at 2,873.23. The furthest the index has fallen since then is 10 % to 2,581 on 8 February 2018. The bull marketplace has lasted for 3,453 days .
There are caveats to add. The 20 % fall in 1990 was actually a 19.92 % but rounding up has led to a consensus that a newly bull market began then .
You should besides note that the definitions are based on closure prices. An intra-day descend in 2011, which took the grocery store devour more than 20 % from its high, would have broken the current bullshit marketplace, making it entirely seven years retentive .

The five biggest bull markets over the last 50 years

Putting the caveats aside, it is possible to identify the major bull markets of the past five decades .
Since 1970, the S & P 500 has seen seven bull markets, five of which resulted in a market ascend of more than 100 % .
1.       The 1970s economic recovery
Despite perceptions of economic tumult in the 1970s, assets rose quickly in certain periods. A rally started in 1974. It came after a recession that followed the post-Second World War expansion and lasted precisely over six years during which clock time the S & P 500 rose by 122 %. The decade besides saw high inflation, which would have eroded asset price gains .
2.       The Reagan-era presidency bull market
This was the joint unretentive of the five bull-runs where the S & P500 rose in surfeit of 100 %. however, on an annual basis it was the best performing bullshit commercialize, with the S & P rising 26 % per annum. It was powered by huge tax cuts, massive job creation and record wealth creation and lasted between August 1982 and August 1987 .
3.       The great expansion of the 1990s
This taurus market coincided with good economic times ; robust job growth in the US and a tax relief act made certain stocks attractive. technology companies boomed as the internet took off and culminated in a knock-down bull marketplace that went to extremes before collapsing in early 2000. This bull-run began on 11 October 1990 and lasted just under nine-and-a-half years. The total index rise was 417 % .
4.       Pre-global financial crisis bull market
Beginning in the consequence of the dotcom bubble and September 11 attacks, this taurus market lasted between October 2002 and October 2007. It was fuelled by abject pastime rates and easy entree to accredit which was largely invested in the housing commercialize. It ended when property prices began to collapse due to the subprime mortgage crisis .
5.       Post-global financial crisis bull market
The current bull marketplace is the longest on record. It began in March 2009 and has been fuelled by record-low interest rates and the easy monetary policies adopted by cardinal banks which has made it cheap to borrow money. It has been extended by President Trump ’ sulfur tax cuts, which reduced taxes paid by US corporations .
Read more: The ball-shaped fiscal crisis in six charts

Major bull markets since 1970 Market performance Market performance (CAGR)*
1970s Growth: 3 Oct 1974 – 6 Jan 1981 122% 14%
Reagan era: 12 August 1982 – 25 Aug 1987 229% 26%
The great expansion: 11 Oct 1990 – 24 March 2000 417% 19%
Pre-GFC bull market: 9 Oct 2002 – 9 Oct 2007 101% 15%
Post GFC bull market: 9 March 2009 – present 323% 16%

*CAGR : Compound annual growth rate. The compound annual growth rate ( CAGR ) is the mean annual growth pace of an investment over a specified period of time longer than one year.

For information purposes merely. Please remember that past operation is not a lead to future performance and may not be repeated .
source : Schroders and Thomson Reuters Datastream. Data for S & P 500 right as at 20 August 2018 .

It’s not just US stocks that have risen

While US shares have enjoyed the biggest gains over the last nine-and-a-half years, the rally in stocks has been global. german stocks have returned closely 250 % over the lapp period and united kingdom stocks have made precisely over 200 %, according to MSCI indices. chinese and japanese stock markets have registered returns of closely 200 % .
quantitative comfort ( QE ), which is efficaciously central banks pumping money directly into the fiscal organization by way of asset purchases ( chiefly bonds ), has driven down the monetary value of finance. It has kept lenders lending and corporations spend. It has inflated the prices of many assets, from lineage markets to houses to authoritative cars .

Stock market returns since 9 March 2009

For information purposes only. Please remember that past performance is not a guidebook to future performance and may not be repeated .
source : Schroders and Thomson Reuters Datastream. Data for S & P 500 adjust as at 21 August 2018 .

Which sectors have gained the most?

equitable as with the bull’s eye market of the 1990s engineering stocks have led the gains. Facebook, Amazon, Netflix and Google, known as the FANGs, have been democratic with investors. As the graph below illustrates, $ 1,000 invested in the technology sector in March 2009 would now be worth $ 6,326, not adjusted for inflation .
The worst do sector was the basic resources, which includes the likes of oil producers and miners. The sector was deserted by the majority of investors during the altitude of the recession as demand for raw materials slumped along with ball-shaped growth. An investing of $ 1,000 in March 2009 would now be deserving $ 1,907 .

What $1,000 would be worth now if you invested in March 2009

Best performing sectors globally : March 2009 – August 2018

For information purposes entirely. Please remember that past performance is not a lead to future performance and may not be repeated .
The measure of investments and the income from them may go down a well as up and investors may not get back the amounts in the first place invested .
informant : Schroders and Thomson Reuters Datastream. Data for Thomson Reuters Global Sector Indices in local anesthetic currency on a entire return footing, which includes dividends, and not adjusted for inflation. Data correct as at 20 August 2018 .

What’s happened to valuations?

If share prices rise more quickly than the profits of those companies then valuations inescapably change .
The table below offers a snapshot of this. Higher dividend income can suggest better measure, with shares producing more income. The other measures, the price-to-earnings ( PE ) ratio and the price-to-book ( PB ) proportion, compare share prices with profits or with the “ record value ” – the estimated remainder valuation of a company ’ sulfur assets and parts. With both, a lower ratio suggests better prize .
In 2009, investors in the US stock market received a properly income yield of 3.3 %. nowadays, they could expect merely 1.9 % .
conversely, the P/E proportion has gone from around 12 up to 23, while the P/B ratio has more than doubled. A swing to higher valuations is expected as the market rises. For investors, the crucial task is working out whether those valuations remain attractive today .

Country Dividend yield (2009 vs 2018) PE (price to earnings) ratio (2009 vs 2018) PB (price to book) ratio (2009 vs 2018)
China 3.5% vs 2.0% 9.2x vs 14.7x 1.6x vs 1.9x
Germany 6.3% vs 2.8% 7.6x vs 16.0x 1.0x vs 1.8x
Japan 2.9% vs 2.1% 10.6x vs 14.1x 0.9x vs 1.4x
UK 6.0% vs 4.0% 6.4x vs 17.2x 1.2x vs 1.8x
US 3.3% vs 1.9% 11.8x vs 23.1x 1.5x vs 3.4x

source : Schroders and Thomson Reuters Datastream. Data for MSCI indices correct as at 20 August 2018 .
Marcus Brookes, Head of Multi-Manager at Schroders, said:
“ As investors, we aim to buy when valuations are reasonable, to improve the chances of achieving better returns. To justify current high valuations we would need to see hard ball-shaped economic growth to boost party earnings .
“ In addition, valuations may be worse than they look because US tax cuts have flattered the tempo of earnings growth. If you look at the trailing PE, it is higher than it was at the top of the market in 2007 ( 17.4x ) .
“ There ’ mho another all-important eminence from other bull markets. During the technical school boom, a minor act of companies were on very high valuations. In today ’ randomness market, there are a far greater issue of companies on high valuations .
“ And it ’ s not merely PEs reflecting high valuations. The price-to-book valuation is at its highest grade since the engineering boom and the price-to-sales proportion for the US is at a phonograph record horizontal surface .
“ That ’ randomness why strong economic growth is needed. The problem is that the backdrop is actually one where the economic cycle growth rate has probably peaked, we have trade disputes and we have monetary tightening in the mannequin of central bank stimulation being removed or matter to rates being raised. It ’ south far from the arrant mix of conditions.

“ In a low-return universe, we don ’ metric ton think this is the time to be overexposed to volatile assets that look expensive and which need dear times ahead to justify their valuations. At this point, other, less volatile assets, such as cash, have their attractions. It ’ s noteworthy that u government bonds, in the mannequin of three-month Treasuries, presently [ 22 August 2018 ] yield a little over 2 % – more than the US stock grocery store. ”
A emanation in interest rates generally causes bind prices to fall. A decline in the fiscal health of an issuer could cause the measure of its bonds to fall or become worthless. Investors are urged to seek the aid of a professional adviser in maintaining a poise portfolio .
The respect of investments and the income from them may go down american samoa well as up and investors may not get back the amounts primitively invested .

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