Longest Bull Market? | Charts that Count

We are, at this
moment, in the middle of what many people
say is the longest bull market in the history
of the US stock market. I would like to argue
that they are wrong. Now, to start off with, let’s
take a look at this scale here, which is the S&P 500
main index for the US stock market in dollar terms. That’s how you normally
see the S&P 500 presented. And you can see the argument
why this is a big bull market. We have been going
up roughly ever since this point here, which
is the famous level of 666. Back in March 2009,
the S&P hit rock bottom at the devil’s number
and has been going up roughly ever since
in dollar terms. But now, to cast a little
bit more light on this, let’s take a look
at this scale here. This is the green line. And this shows you the S&P
500 divided by the gold price. You could say that this is
the effective price of the S&P when denominated in gold. Now, we’re going all
the way back to 1971 on this chart, which is
when President Nixon, who’s in many people’s
minds these days, took the US off the
Bretton Woods peg to gold. And you can see that
if you look at this in terms of the
gold ratio, whenever gold is rising more
than the stock market, this line will go down. And you can see that
throughout the 70s, you have a huge,
savage bear market. That is because rises
in the gold price show you worries
about inflation. They show you worries about
debasement of the currency. There were a lot of those
during the troubled decade of the 1970s. Now, come 1980, gold gets into
a very extreme bull market and then begins to decline. The following year, stocks enter
a bull market of their own. And you have this enormous –
when you follow the green line – bull market that
doesn’t end until here, in the 2000s, when you get to
the dotcom bubble bursting. That is plainly a much longer
bull market of almost 2 decades than the one we’re in now. Now, this is true
even if you can barely see it on this chart. But back there, down
there, is Black Monday, when stocks fell by more
than 20% in one day. Even if you count that as a
bear market in its own right, you’re still talking about a
bull market of some 13 years at that point. Now, there’s one
other point that I think the gold price can show us
when we compare it to the S&P. You’ll see that from
the great low of 2009, it actually fell almost 20%. And so they’d hit a
low, which you can also see there in the fall of 2011. That was associated with the
furore over the debt ceiling and also by Standard & Poor’s
decision to downgrade US Treasury debt. Since then, whichever
way you look at it, whether in dollars or
denominating in gold, yes, there has been a very
strong consistent bull market. And it’s in that period that the
US stock market has comfortably beaten commodities of almost
any description and virtually any other stock
market in the world. Yes, this is certainly
a bull market, but it’s not the
longest one in history.

4 thoughts on “Longest Bull Market? | Charts that Count”

  1. Thanks to Regen and trickle down, the majority of the wealth that is created since the 1980's have gone to the 0.01% of the US population. So that means, the majority of the wealth are in the hands of only 12,600 households… There is no doubt that middle class is shrinking very fast and so many people have to work two/three jobs just to be in the middle class…There is no trickle down…. Most middle class can barely make their ends meet, yet alone investing…

  2. Why does everything have to be compared with gold anyways? Gold is just another commodity like copper or silver. Why not compare it with bitcoin or soybeans instead? 😂

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