Posts filed under “Cycles”

Bull Markets Since 1871: Duration and Magnitude

Butler|Philbrick|Gordillo and Associates have an interesting post called What the Bull Giveth, the Bear Taketh Away on the duration and magnitude of all bull and bear market periods in U.S. stocks since 1871.

For the purpose of the study below, we examined the S&P 500 price series from Shiller’s publicly available database to understand the duration and magnitude of all bull and bear market periods in U.S. stocks since 1871. We defined a bear market as a drop in prices of at least 20% from any peak, and which lasted at least 3 months. Bull markets were then defined as a rise of at least 50% from the bottom of a bear market, over a period lasting at least 6 months.

Chart 1 and Table 1 describe every bull market since 1871 in the S&P, including duration and magnitude information. The lesson from this analysis is uninspiring for equity bulls, as we will see. The core hurdle is that the current bull market has (through end of February) already delivered 105% of gains, against the median 124% bull market run through history (using monthly data). Of course, this means that, should this bull market deliver an average surge, investors can hope for less than 20% more growth from this cycle. Further, given that the median bull market has historically lasted 50 months, and we are currently in our 49th bull month, we are about due for a wipeout.

Chart 1. Bull Markets since 1871

Click to enlarge

Source: Shiller (2013)

Table 1. Bull Markets since 1871 – Statistics

Click to enlarge

Source: Shiller (2013)

The current bull market has already delivered 85 percent of the gains, and lasted about as long, as the median historical bull market.

Read What the Bull Giveth, the Bear Taketh Away for the bear market equivalents of the preceding bull table and chart. Butler|Philbrick|Gordillo and Associates demonstrate that, if it follows the median bear market, it will wipe out 38 percent of all prior gains.


Tobias Carlisle
The Physics Of Investing In Expensive Markets: How to Apply Simple Statistical Models, April 17, 2013

Category: Cycles, Markets, Technical Analysis

Bubble/Mania Cycle

Bubbles and Manias Source: Jean-Paul Rodrigue, Dept. of Global Studies & Geography, Hofstra University   Fascinating chart showing the psychological of a longer market cycle via Prof Jean-Paul Rodrigue.   Previously: Lagging Psychology at Turning Points Investor Sentiment Wheel Psy Cycle Economic Cycles and Investing

Category: Cycles, Psychology

The Truth About Market Timing

Yesterday in Barron’s, Mark Hulbert asked: “So, How Did the Market Timers Do?“: “Now is a perfect time to ask these questions: With the stock market back to where it stood in October 2007, the last five-and-a-half years constitute an ideal laboratory in which to judge the success of market timing in the real world….Read More

Category: Apprenticed Investor, Cycles, Investing, Markets

Professor Sylla: More Dow Records to Come?

Richard E. Sylla, financial historian and professor of economics at NYU’s Stern School of Business, discusses the likelihood of a series of markets highs, the impact of the Fed’s ability to keep interest rates down, and the tendency for investors to buy high and sell low, in a big interview with WSJ’s Jason Zweig.


Category: Cycles, Investing, Markets, Video

Manufacturing Jobs 2003-2013

U.S. Employment Situation (February 2013) click for larger graphic     Bruce Steinberg puts the past decade (or 5) of Employment data into a bigger context, detailing in particular the impact of Manufacturing Jobs: “Manufacturing, which declined 16.6% or about 2,270,000 jobs, from January 2008 to January 2010, were up 4.3%, or about 500,000 jobs,…Read More

Category: Cycles, Data Analysis, Employment

U.S. Business Cycle: Yo-Yo Years

Source: Economic Cycle Research Institute

Category: Cycles, Think Tank

Investors Should Ignore Politics

Politics matters little to your investment outcomes. This has been a theme of mine for nearly forever. I discuss this in presentations all the time.  It was — literally  — my first column for the Washington Post. And yet the financial press simply cannot get enough of this stuff. They love a good narrative. While…Read More

Category: Cycles, Markets, Politics, Psychology

Most Long-term Charts of DJIA Are Wrong

Source: The Chart Store   Chartmeister Ron Griess explains why most of the charts of the Dow Industrials that include the 1st few decades of the century are wrong: “Dow Jones and Stockcharts both have it wrong. Wall Street has been doing it wrong for a long time. I remember Alan Shaw of Smith Barney…Read More

Category: Cycles, Digital Media, Investing, Really, really bad calls

DJIA vs S&P 500 P/E

Monthly chart portfolio of global markets Source: Merrill Lynch   The chart above, courtesy of the Merrill’s chief Technical Analyst, shows the relationship between long term secular bear markets and valuation as measured by price to earnings (P/E) ratio on a monthly chart. This is the primary reason I am unconvinced that the secular bear…Read More

Category: Cycles, Earnings, Investing

Explaining My Position on Secular Bear Markets

I hate seeing myself misquoted, misinterpreted, or just misunderstood.My prior explanations (see this and this) about how Secular Bear Markets reach their final denouement was apparently too subtle. Since nuance apparently gets lost on some people, so let me make this as clear as possible: 1. A Secular Bear Market began in March 2000. 2….Read More

Category: Cycles, Markets