Is the Bull Market really 5 Years Old?

[UnrealizedPotential]

I pose this question because in October of 2011 the S and P 500 hit what was technically a sum total 20% intraday downturn from the previous high ,labeling it a bear market.The Dow and Nasdaq in 2011 fared better,but after the 2008-2009 bear market it seemed overkill to have another sharp drop so soon in time.So if the Bull market didn't really start until after October of 2011 this makes it only roughly 2.75 years old and not 5 years into the Bull market.If this is true,and I am only supposing ,then maybe this helps to explain the lack of a 10% correction.We had a nice 6% correction in the SP500 some months ago and nice correction in biotechs in the Nasdaq earlier this year. If my theory is correct maybe,just maybe this Bull Market is not so long in the tooth as was thought.This doesn't mean we won't have a nice correction at some point soon,but I think we may be in better shape than was previously thought.What does everyone else think?

 

[REWahoo]

Only time will reveal the answer.

 

[eta2020]

It does not matter... Over a long run...

 

[John3754]

You're looking for patterns and explanations where there are none. There are no rules governing how long a bull market can or should be, and the "correction" that occurred in 2011 has absolutely no effect on what the market will do tomorrow, next week, next month, or next year.


Sent from my iPhone using Early Retirement Forum

 

[Midpack]

A Stock Market Crash Simply Can?t Happen - Here's Why | InvestorPlace

Steen Jakobsen: Expect A 30% Stock Market Correction In 2014 (Podcast) | Seeking Alpha

What we know for sure, there will always be seemingly convincing gloom and doom predictions from well credentialed sources - always...

 

[NW-Bound]

I dunno. But I think many of us just want to see the doggone correction happen to get it over with.

However, the market, as unpredictable as it is, just won't cooperate.

So, maybe it will just linger on, then crash instead. That would not surprise me either.

 

[UnrealizedPotential]

I dunno. But I think many of us just want to see the doggone correction happen to get it over with.

However, the market, as unpredictable as it is, just won't cooperate.

So, maybe it will just linger on, then crash instead. That would not surprise me either.

I have never seen a market quite like this before.It seems to be without rhyme or reason in what it does.I will take it as it comes,good or bad,I always have.

 

[CaliforniaMan]

I have never seen a market quite like this before.It seems to be without rhyme or reason in what it does.I will take it as it comes,good or bad,I always have.

I guess it means that when it starts to make sense....

 

[heeyy_joe]

It is good to climb the wall of worry.

 

[danwhite77]

I was just discussing this with a friend of mine. I view this as a five year bull run. To me, we are out of the "honeymoon" period that typically follows a recession where you can be reasonably "certain" (if such a thing exists) of equity gains. Now we're more in the grey area where a correction or bull could take place at pretty much anytime. However, for me, it's all academic because I don't base any decisions on near term market movements. It's still fun to ponder the future, of course.

 

[panacea]

I'm much better at rebalancing after the fact than trying to predict what the stock market will do. I just stick to my target allocation. Plain vanilla, boring investing.

 

[aja8888]

I have never seen a market quite like this before.It seems to be without rhyme or reason in what it does.I will take it as it comes,good or bad,I always have.

It's different this time...

 

[UnrealizedPotential]

It's different this time...

Just because I have not seen a market like this does not mean it has not happened before.The different this time beliefs is what usually gets one into trouble.If I have made myself clear you have probraly misunderstood what I have said.

 

[nash031]

I have never seen a market quite like this before.It seems to be without rhyme or reason in what it does.

I have seen the "no rhyme or reason" kind of market every day of my investing existence.

 

[NW-Bound]

My feeling is that the US market either goes up a bit more in the near future, or trades sideways. Of course there may be a correction any time, but I do not see any reason for a big crash. I have quite a bit of foreign equities, specifically developing countries, and they have not been doing well since 2011 until recently. These have been recovering.

So, I am staying put and will maintain my 70% equity AA until something happens to change my mind to reduce it.

 

[walkinwood]

Besides the fact that the stock market is at all time highs, what is causing you (those who commented above) to think that a crash or correction is likely? Or is that the main reason?

 

[FIREd]

I am usually a bargain hunter and I am losing interest in this market. I am sending all income surplus to cash.

 

[NW-Bound]

Besides the fact that the stock market is at all time highs, what is causing you (those who commented above) to think that a crash or correction is likely? Or is that the main reason?

It's just a human factor.

When there has been a long run, people tend to be edgy and want to book the gain. And selling tends to be contagious. Often at a party, nobody wants to be the first to leave, but when someone has set a precedent, that often opens the floodgates.

If the market pulls back for no obvious reasons, it's a correction that then corrects itself, and the market will regain its earlier value.

 

[Midpack]

I have never seen a market quite like this before.It seems to be without rhyme or reason in what it does.I will take it as it comes,good or bad,I always have.

While this market is a little "rich", there's far more "rhyme or reason" to it than 2000 in comparison...not that long ago.

 

[nash031]

Besides the fact that the stock market is at all time highs, what is causing you (those who commented above) to think that a crash or correction is likely? Or is that the main reason?

Because a correction is always likely? It'll happen, just a matter of when.

 

[Fermion]

This bull market could run quite a bit more if we hit those numbers reached in 2000. DOW 30,000 anyone?

 

[Andre1969]

I don't know what the S&P did, but I remember a quick drop around that timeframe. I hit a new high on July 7, 2011, but by August 8, I was down about 13.5%. Back then, I had my spreadsheet track peaks and valleys of the month, rather than just the final day of the month, so that's why those days stick in my mind. I think it was September of that year that I finally switched over to just using the last day of the month.

Overall, 2011 was a pretty flat year for me, I think I lost about $1,000 total. Overall NW was up because of additional contributions. By January of 2012, I had hit a new peak.

I don't have my spreadsheet with me to verify, but I don't think I've had any major downturns since then. I think April/May of 2012 got a little rocky, but it didn't last. I also remember a slight dip around May/June of 2013, another quickie in August 2013, and one more around Jan/Feb this year. They were all pretty quick snaps though, probably losing only 3-5%, and rebounding pretty quickly.

I'll admit though, that I'm still a little gun-shy after the "Great Recession", so every time there's another downturn, I think, what if it's happening again? But, my portfolio is also better balanced these days, so I wouldn't lose as much, and I'd have more funds available to buy low.

 

[target2019]

While this market is a little "rich", there's far more "rhyme or reason" to it than 2000 in comparison...not that long ago.

I searched for that picture on dshort.com, but could not find it. Do you have a pointer to it?

Edit: Found it!
http://www.advisorperspectives.com/dshort/charts/valuation/PE-ratio-overview.html?SP-and-PE10.gif

 

[REWahoo]

Help, I'm lost. Where are we?

 

[Andre1969]

Help, I'm lost. Where are we?

That's the fundamental problem...we won't know til after we've gotten there!