Welcome to the Second Largest Bull Market Since WWII

Last Monday may not have felt like an important day for investors, but did you know it was the day that the current bull market in the S&P 500 Index officially became the second strongest since World War II (WWII), as the chart below shows? Per Ryan Detrick, Senior Market Strategist, “The current bull market is now up nearly 270%, besting the 267% gain from June ’49 to August ’56. Only the huge bull market of the 1990s stands in the way of its gold medal.”

As we’ve mentioned before, in terms of length, the current economic expansion recently turned eight—which ranks it third since WWII. While the expansion that began in 1961 remains in second place (for now, at least), the period saw two bear markets: a roughly 30% decline from late-1961 to June 1962, which some refer to as the “Kennedy Slide of 1962”; and the nearly 22% drop in 1966 attributed to the Federal Reserve’s tightening of credit conditions amid heightened government spending for the Vietnam War and President Johnson’s social programs.

Source: LPL Research, National Bureau of Economic Research   06/22/17

The logical question we continue to receive is: how much further can it go? We have an old bull market and an old expansion. When will the music stop?

The current bull market is officially 101 months old, which might sound old (and it is), but remember that bull markets don’t die of old age, they die of excesses. As we laid out in the Recession Watch Update and update monthly on our House of Charts site, we simply aren’t seeing the type of excesses that have historically preceded major market and economic peaks.

All in all, within the near term we do have our concerns, but when looking at the bigger picture, the global economy continues to chug along, inflation is low, the odds of a recession over the next 12 months are low, and central banks remain accommodative. All of that suggests that this bull might be old, but it still could have some tricks up its sleeves.

IMPORTANT DISCLOSURES

Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in the presentation may not develop as predicted.

International and emerging markets investing involves special risks, such as currency fluctuation and political instability, and may not be suitable for all investors.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

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