The Longest Bull Market in History?

By: Richard A. Anderson

When the closing bell rang on Wednesday, August 22, 2018, many media outlets were quick to celebrate the longest bull market in United States history. However, there are many investment professionals and historians who beg to disagree with this notion. You’re probably asking yourself how can there be a disagreement on whether this bull market is the longest ever? It either is or isn’t. It’s black or white. Day or night. Unfortunately, it’s not that simple.

Depending on who you ask, there are multiple reasons why this current bull market is not yet the longest in history. But one thing these arguments all have in common is that there is no consensus definition on what constitutes a bull or bear market.

It is commonly accepted within the financial industry that a decline of at least 10% is considered a correction and a decline of at least 20% is considered a bear market. Bull markets, therefore, are the periods that occur between bear markets. Yet, not everyone agrees with these definitions. There are some who will argue that a bull market doesn’t begin until the previous high-water mark has been surpassed. Others will argue a much more nuanced definition based on time and price change.

At Wednesday’s market close, the S&P 500 managed to avoid a decline of 20% or more on a closing basis for 3,453 calendar days. This streak began way back on March 9, 2009 following the Great Recession, but it was tested in October 2011. The S&P 500 had a peak to trough decline of 19.4% following the U.S. debt downgrade and Greek financial crisis.

It is commonly believed the previous longest bull market in history lasted 3,452 days from October 11, 1990 to March 24, 2000. However, based on the 20% decline rule mentioned above, there was no bear market in 1990. The S&P 500 declined 19.9% from July 16, 1990 through October 11, 1990. Only by rounding up would this decline constitute a bear market. Therefore, it can be argued the longest bull market began on December 4, 1987 and ended on March 24, 2000 at 4,494. By this count, we are far from history.

I know this all sounds very punctilious.

There is a case that rounding is questionable. If the S&P 500 decline in October 2011 was 19.5% would that be rounded up? Would we then consider that a bear market?

There is a case that the 20% definition is rather arbitrary. 20% was most likely chosen because it is a nice round number, not because there is any statistical support.

There is also the argument about closing values as compared to intraday lows. In October 2011, the S&P 500 experienced a decline greater than 20% intraday but recovered to close above the 20% threshold. Should this be considered a bear market?

I’ll leave the bear market definition debate to the media types and market historians who, apparently, have nothing better to do. Rather than asking the question “is this really the longest bull market ever?” a better question is “does it matter to me?” The simple answer is no. We urge you to focus on what you can control: savings rate, asset allocation, taxes, costs, and emotions. The rest is out of your hands. That’s not to say current market valuations and future expected returns don’t matter. But those uncontrollable variables will have less of an impact on the success of your financial plan if you are doing the things you can control the right way.

Whether or not this is the longest bull market ever, it shouldn’t affect our investing decisions. Markets go up and down over shorter time periods, but they have always recovered from lows to reach new highs. And, as the old adage goes, bull markets don’t die from old age.