Stock Markets Don’t Grow To The Sky

Monty Pelerin / Economic Noise

Stock markets have cycles of sorts. They don’t go in one direction forever. How does the current market compare with other bull markets?

There is good news and bad news. The good news is that this market has had a remarkable run, but that is also the bad news. Can it continue much longer? After a run like this, will it have a comparable, noteworthy correction?

These questions are valid, but unanswerable. Sometimes it is useful to look at history to understand the present. E. S. Browning provides the following perspective:

As the bull market turns five years old, stock investors have a lot to celebrate.

 

The Dow Jones Industrial Average has soared 151% since stocks bottomed March 9, 2009, following the financial crisis. That ranks it fifth in gains among the 32 bull markets since 1900.

 

It also is tied for fifth-longest-running, in trading days, with the one that ended in 2007, according to Ned Davis Research.

 

If the current stock advance lasts another 16 trading days, it will be the fourth-longest, surpassing the one that ended in 1987.

 

The Nasdaq Composite Index is up 242%, and the Russell 2000 small-stock index is up 251% in that time. A bull market is commonly defined as a gain of at least 20% from a market low.

read more at Economic Noise:

http://www.economicnoise.com/2014/03/09/stock-markets-dont-grow-sky/