Secular Bull and Bear Markets: A History Lesson

by | Sep 15, 2014 | Videos, Stock Market Comments

In our morning research meeting today we discussed bull markets and how long they typically run for. A book that discusses this topic in-depth is Unexpected Returns by Ed Easterling. In this week’s video, Tom shares a brief history lesson on bull and bear markets.

In reading Easterling’s Unexpected Returns, we’ve gathered that bull markets tend to take off. Bear markets, on the other hand, tend to be volatile but finish off their cycles almost exactly where they started them. Looking at the Dow Jones Industrial Average since 1964 can show us a couple examples of this.

From 1964 through 1981, the Dow fluctuated above and below 900. Ultimately, it began 1964 at about 900 and finished out 1981 around 900. That bear market cycle lasted 17 years, and the market was essentially flat.

In 1982 a bull market phase began with the Dow at 800. The end of that bull market run was in 1999 with the Dow at 10,000. Another 17 year cycle, but this time to the upside.

From 1999 until 2011, we experienced another bear market cycle. The Dow was at 10,000 in 1999 and finished 2011 looking quite similar. That phase lasted 13 years.

Since 2011 we have entered another bull market phase. The Dow has risen from 10,000 in 2011 to around 17,000 now in September of 2014.

How long will the current bull market cycle last? Nobody can answer that with certainty. What we do know is that history can provide us with some insight on this subject. As you may have heard before, history doesn’t repeat itself but it often rhymes.

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