S&P 500 Performance Following New Bull Market Highs

Mark Hulbert (MarketWatch) shares the following insights from a recent Ned Davis Research report:

The accompanying table reflects…the 13 instances since the S&P 500 was inaugurated in the 1950s in which, following a bear market, it reached a new high.

new sp 500 high

On average following those 13 cases, according to Ned Davis’s firm, the bull market continued for another 644 days — nearly two years — and, in the process, gained an additional 40.3%.

To be sure, this mean is skewed upwards by a few outliers; the median may therefore paint a more accurate picture. But even in the median case, the bull market lasted more than a year more and gained more than 18%.

Now of course, taken in isolation, this data is stupid-bullish. But probabilistically speaking 60 years or so is a sample size only a mother could love, those who work in the field of statistics wouldn’t get overly excited here.

But I find that this data is very helpful for me to share with a handful of clients who’ve called to talk about our re-visitation of the old market highs.  They are nervous about the idea of all-time high stock markets and with good reason.  It’s helpful to remind people that Dow 1000, for example, was a new high in 1966 and again in 1982 before ripping through.  Every price was once an all-time high, after all.


Would new Dow record set a bear market trap? (MarketWatch)

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