The new Bull market just turned one year old.
The SP500 hit a low on March 23, 2020, capping the fastest bear market of all time. Since then, it’s up 76%. This tremendous change illustrates how volatile the market can be, and the value of a long-term approach.
Looking forward, what will year two of this market look like?
Going back to World War II, in every instance the S&P 500 was up significantly the first year of the new bull market. On average the first-year annual performance was more than 40%. The good news is the gains continued in year two, as stocks were also up the second year of a new bull market every single time. The average was up a solid 17% in year two.
I want to point out something important to be aware of:
Market declines often occur in the second year of a new bull market, with an average pullback of 10%. Since the bull market we are currently in has the best start to a bull market in history, this indicates the likelihood for an above-average pullback during year two. Therefore, history indicates we should expect some turbulence this year.
The good news is, as we can see, the previous six bull markets since WWW all had significant gains during the second year. In other words, the second year of the bull market was in all instances a good market.
This bull market is off to an amazing start, but it is important to remember it is still young.
The new covid vaccines, fiscal and monetary stimulus, and a robust economic recovery all are positive developments.
If you have questions on the current bull market, please give me a call or visit us online at ChambersFinancialGroup.com.We’re not in it for the short term, we’re in it for the long term