A recent piece in Investment News notes that although the current bull market is “one of the longest stock rallies in history,” most investors nonetheless remain “lukewarm” toward stocks. While the average bull market lasts less than 59 months, this one has been ongoing for 84 months. The longest ever began in 1990 and ended in 2000. Since March 2009, the S&P 500 is up over 189% according to Morningstar. Yet, in roughly the same period, investors have pulled a net $189.7 billion from open-ended stock funds and, according to Investment Company Institute, a net $623 billion from U.S. stock funds. Sam Stovall of S&P Global Market Intelligence said the current bull could be called “the Rodney Dangerfield market” because “it gets no respect.” The 2007-09 financial crisis plays a role, as does the fact that there have been two significant bear markets in the last 15 years. Stovall explained that “you typically see a 25-year separation between 40%-plus down markets.” Financial psychologist Brad Klontz noted that the last time there were two big bear markets back-to-back, in the 1970s, “relatively few people were investing in the stock market.” Further, there is suspicion regarding the effect of the Federal Reserve’s easing policies over the last eight years, although Stovall noted that corporate earnings have risen 282% since the bull market began.
Bull market gains have not been evenly distributed, of course. Energy equities gained an average of only 5.54% annually since the bull market began, according the Howard Silverblatt of S&P Dow Jones Indexes, while consumer discretionary stocks rose an average of 25.31% per year over the same period.
There do not appear to be signs of an imminent end to the bull. Stovall explained that rather than taking away the punch bowl as the party gets started (an old adage), the Fed seems to just be “refilling the punch bowl more slowly” than it was a few years ago. Further, bull markets generally end after a burst of enthusiasm and Klontz said, “I don’t see the same levels of enthusiasm we saw in 2006 or 1999.”