Much is being made about the fact that the bull market is marking its ninth anniversary today. The bear market of the Great Recession hit its bottom on March 9, 2009 and has steadily moved up since then, especially in the United States. The bump we hit in February 2018 is now ancient history. Naturally, most market analysts refer to this as an old bull market since it has been moving steadily upward for the past nine years. But how old is it?
Yes, the United States stock market hasn’t had a 20% correction, or even a 15% correction since 2009, but that is not true of the rest of the world. If you look at both the MSCI Europe Asia and Far East (EAFE) index which includes all developed countries except the United States, and the MSCI Emerging Market Index, these two global indices finished a bear market on February 11, 2016, declining from the peaks of July 2014. A second low was hit in July 2016 and it has been off to the races since then.
This fact is confirmed by GFD’s Indicator of global bull and bear markets which sums the number of bull and bear markets that begin or end in each year. This indicator which covers over 100 years of global stock market data hit its highest number of bear markets since 2009 in 2016.
The United States stock market did not participate in the global bear market that stocks endured between July 2014 and February 2016. During that period of time, the United States stock market treaded water, moving sideways rather than falling into a bear market as most of the rest of the world did.
We are of the opinion that we are not in the ninth year of a bull market, but only in the second year and that the current bull market is likely to push forward for the rest of the decade. While the 2009 to 2016 market cycle was driven by exceptionally low interest rates, this will not be true in the market cycle that has begun. This market will be more like bull markets of the past because interest rates will rise, not only in the United States, but in Europe, and sometime in the 2020s we are likely to suffer another bear market.
We have two years under our belt, and global stock markets are all moving up together. We probably at least two more years to go. So enjoy the next two years of growth in the global stock market.
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