Is This Really the Longest Bull Market Ever?

They say it’s the longest bull market ever.

Image of longest bull market ever

Certainly makes for a good headline, but what does “bull market” mean? And is determining its length of any value for investors? Let’s take a look…

Defining the “Bull”

There is no standard definition for “bull market.” If you ask 10 different market participants you could easily get 10 different answers.

Many say it’s a 20+% rally in stocks that continues indefinitely until there’s a 20% decline. Why 20% and not 19% or 21%? Who knows. We like round numbers and someone decided years ago that 20% was as good as any barometer. Over time it caught on.

But how should one measure the 20% moves?

a) Should you use price returns or total returns (including dividends)?

Most use price returns, ignoring the large differences that dividends can make over time.

This is true on the upside…

The S&P 500 Index is up 328.5% since March 9, 2009. Including dividends, it is up 422.7%.

Image of S&P 500 returns since March 2009 to July 2019

And on the downside….

If you include dividends, the “bear market” from June 1948 to June 1949 is magically erased (dividend yields averaged over 5% during this time).

S&P500 index image from June 1948 to June 1949

Data source: Bloomberg

b) Should you use closing prices or intraday prices?

Most use closing prices, but if they used intraday prices the current bull market would have ended in October 2011.

Image of S&P 500 index Intraday and Closing of 2011

The same is true for the declines in 1990 and 1998 that fell just short of 20% on a closing basis but exceeded 20% intraday. The articles claiming that this is the “longest” bull market ever seem to be ignoring this fact, arbitrarily using intraday prices for 1990 and closing prices for 1998 and 2011.

Using closing prices for all periods, this is the second longest bull market, still trailing 1987-2000 run by over 1000 days.

Image of second longest bull market from 1987 to 2008

c) Should you use the S&P 500 or a broader index such as the Wilshire 5000?

Most use the S&P 500 but if they chose the Wilshire the current bull market would have ended in 2011, even if you used closing prices.

Image of Wilshire 5000 composite index from Jan 2011 to Dec 2011

And then there’s the question of when the measurement period for a bull market should begin.

Should it start from the previous bear market low or only after surpassing the prior bull market peak? Most people use the bear market low (March 2009) but if you use the latter the current bull market did not begin until March 2013.

If you are thoroughly confused at this point, there’s a saving grace…

Determining the length of a bull market is of zero value for investors. And if acted upon, it’s actually of negative value.

Let me explain.

The not-so-subtle implication in stating that the current bull market is the longest ever (regardless of whether that statement is actually true) is that one should use that information to sell everything. “Long in the tooth” is frequently used in such admonitions along with”this won’t end well” and my personal favorite, “what goes up, must come down.”

The only problem: this logic would have failed miserably as an investment strategy.

Let’s say you went back in time and got out of the stock market every time the length of the bull market was the longest ever, and only buying back in after a 20% decline. How would such a strategy have fared? Going back to 1932, $10,000 invested in this timing strategy would grow to $11.6 million today versus over $139 million for buy-and-hold.

Image of S&P 500 Buy and Hold vs S&P 500 Bull Market timing from 1932 to 2018

Note: Total Return (includes dividends). Data Source: Bloomberg.

That’s a difference of more than 3% in annualized total return (11.7% vs. 8.5%), a huge cost from market timing based on this signal. Why the large spread?

Each time the previous “longest bull market” records were broken, the S&P 500 did not simply stop on a dime and commence with a bear market. A number of times stocks continued to run higher for months or years, changing the definition of what is “long.” Before the 1987-2000 bull, the longest bull market was 2,607 days (1949-1956). The S&P 500 would break this record in January 1995, and then go up for five more years before peaking in March 2000. The gains that market timers missed out on during this period far outweighed the eventual 20% drop they were hoping for to “get back in.”

So is this really the longest bull market ever?

Yes, if you use the March 2009 low as the starting point, closing prices only, and define bull/bear market as a 19.5% advance/decline. This would cause the 1990 decline to qualify as a bear market (thus ending the prior bull that started in 1987) and the 2011 decline to fall short.

Thankfully, investors can ignore such shenanigans and respond to such questions with a simple “who cares.”


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Charlie Bilello is the Director of Research at Pension Partners, LLC, an investment advisor that manages mutual funds and separate accounts. He is the co-author of four award-winning research papers on market anomalies and investing. Charlie is responsible for strategy development, investment research and communicating the firm’s investment themes and portfolio positioning to clients. Prior to joining Pension Partners, he was the Managing Member of Momentum Global Advisors and previously held positions as a Credit, Equity and Hedge Fund Analyst at billion dollar alternative investment firms.

Charlie holds a J.D. and M.B.A. in Finance and Accounting from Fordham University and a B.A. in Economics from Binghamton University. He is a Chartered Market Technician (CMT) and also holds the Certified Public Accountant (CPA) certificate.

In 2017, Charlie was named the StockTwits Person of the Year. He has been named by Business Insider and MarketWatch as one of the top people to follow on Twitter and his work has been featured in Barron’s, Bloomberg, and the Wall Street Journal.

You can follow Charlie on twitter here.


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