Happy 50th - trading days that is. Last week we clicked over 50 trading days for the year. And the stock market is up +8.3% year to date. Looking back historically, when the market is >5% on day 50, the rest of the year has been higher an amazing 24 out of 25 times. And up more than 12% on average.
The stock market also made all-time highs again last week, extending its current bull market to 517 trading days. If we include this bull market with the other 26 that the S&P 500 has experienced in its history, this bull market’s length would already represent the median at this point.
While the current bull run is right at the median in terms of length, the average bull market has lasted twice as long at 1,011 days. That’s because bull markets over the last few decades have lasted extremely long, including a 4,494-day stretch from December 1987 to March 2000 without a single 20%+ drop on a closing basis. In terms of bull-market gains, this run of +44.7% is still well below the median bull-market gain of 76.7% and not even half of the average bull-market gain of 114.4%.
It’s easy to get complacent when the market goes through a stretch like it’s had over the last 5-6 months.
I say this because we're starting to see bullish behaviour. US equity inflows are at record levels over the last 7 years - US$56.1 billion for the week to be exact. Investor sentiment is high. And investment managers are also taking on risk.
With an average intra year decline of -14%, markets can still go down. It just doesn't mean we won't end the year higher. With the market on average ending the year positive 3 out of every 4 years, and based on the charts above, history says we'll still end the year higher.