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Bull Markets 1871 to July 2014: Duration and Magnitude (Update)

August 04, 2014

The little wobble in the market last week made me think of a post I ran in April last year on the duration and magnitude of all bull and bear market periods in U.S. stocks since 1871 using charts from Butler|Philbrick|Gordillo and Associates’ What the Bull Giveth, the Bear Taketh Away. I’ve used Butler et al.’s method to update the charts to July 2014.

The study uses the S&P 500 price series from Shiller’s publicly available database. I use Butler et al.’s method to define a bear market as a drop in prices of at least 20 percent from any peak, and which lasted at least 3 months. A bull market was defined as a rise of at least 50 percent from the bear market low, over a period lasting at least 6 months.

Chart 1 and Table 1 describe every bull market since 1871 in the S&P, including duration and magnitude information.

Chart 1. Bull Markets since 1871

US Bull Markets Since 1871

Table 1. Bull Markets since 1871 – Statistics

Bull MarketsI don’t believe that there is anything predictive about the duration or magnitude of the average and median bull markets. I only include that information to contextualize the present market. In that sense, it is decidedly average, if a little long in the tooth. It has delivered about 9/10ths of the gains of the average, and lasted a few months less. It has run 11 months longer than the median, and generated 120 percent of the return. Only the bull markets ending in 1929, 1961, 1987, and 2000 returned more (in each case, much more), and lasted longer (in each case, much longer). Two other bull markets lasted longer–those ending in 1902 and 1968–but neither returned as much as the current one.

The two bull markets that really stand out are the January 1975 to August 1987 market, which delivered a return of 391 percent, and the January 1988 to August 2000 bull, which returned an incredible 516 percent. Each lasted 153 months. The two were separated by the 1987 bear market, which drew down only -26.4 percent peak to trough, and lasted just 5 months. Through the full period from January 1975 to August 2000, the market returned 2,140 percent, or 13 percent yearly (excluding dividends)–almost 3 times the yearly return of the long run average of 4.7 percent (also ex. dividends).

About the author:

Greenbackd is a former corporate advisory and securities lawyer working in value-oriented activist funds management.

Rating: 4.0/5 (3 votes)



Praveen Chawla
Praveen Chawla premium member - 6 years ago

Would be interesting to run these numbers showing Bear Markets duration and magnitude as well. Bear markets are much shorter than bull markets but can do a lot of damage in a short period of time.

AlbertaSunwapta - 6 years ago    Report SPAM

"What the Bull Giveth, the Bear Taketh Away" should be required reading for all investors. Someone is selling into market declines and I wouldn't be surprised if a large number of prior self proclaimed buy and hold investors aren't among those sellers.

After looking at chart 2 showing the duration of bear markets, I'd like to see a clearer chart showing the time it has taken to incur the median 38% loss by year of bear market to see if more recent bear markets are incurring that median loss at an increasingly rapid pace or not. In other words, can we expect increasingly rapid sell offs in the future? The corollary to this, of course, is that the 61% break even recoveries would also be happening faster (and something I wouldn't count on happening).

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