Here’s how long this bull market will last

Yesterday marked the 20th anniversary of the death of Notorious B.I.G (Christopher Wallace), probably one of the greatest rappers of all time.

It also marked the stock market’s bottom on 9 March 2009. Seems like such a long time ago, yet the wounds for many investors are yet to heal. It also feels like we’re still talking about the GFC as if it was last month, not only with clients but also within our industry. Yet so much has happened since the GFC.

US unemployment has dropped to what is considered full employment,

US economy is growing again,

US consumer confidence is reaching new highs, and

The US stock market continues to make fresh all time highs.

I could go on, but I won’t. You get my drift.

The US stock market has really only had 3 bull markets (before this one), 1921, 1942, 1982, and 2009. With such a small sample size, it’s difficult to use historical data make predictions into the future.

Notwithstanding this fact, you’ve no doubt heard many compelling stories why this bull market is long overdue. Each bull market is very different from the previous, for so many reasons. One thing they all have in common however, is that they all do come to an end.

Here’s the last three, and current bull markets in the US stock market (HT to Michael Batnick AKA The Irrelevant Investor for the chart).

The current bull market is proving so many people wrong. We could have a sudden halt like we saw in 1929, or we could continue the gradual rise like we saw leading up to 1966 and 2000. There is no way of predicting this. The real question investors need to ask themselves is, am I going to be able to stick with my current asset allocation whether this bull markets ends tomorrow or continues for another five years.

If the answer to this question is “no”, or “I’m not sure”, you need to rethink the mix of your investments.

A global collapse in economies and stock markets is enough to put everything you worked so hard for on hold…for a long time.

Source: Trading Economics, The Irrelevant Investor