Abstract
The S&P 500 index of large cap U.S. stocks has rallied +49% since the October 2022 lows, and +28% since the most recent October 2023 lows. Bulls argue that the equity rally has much more time to run. Typical bull markets last about 5 years. If we consider the January to October 2023 correction to have been a significant bear market that reset the excesses from the prior bull market, then the bull market longevity argument makes senses. Recall that the S&P 500 fell -26% from January to October 2023 following the post-Covid “bull market”, resulting in +108% equity gains. On the other hand, if we argue the bearish case, Covid distortions likely mean that the typical lengths (and magnitudes) of the bull and bear phases can’t be applied today. Bears could argue that the 2022 correction/bear market represented a mid-cycle correction or just a cooling of the excessive movement from April 2000 to December 2021. In any case, whether this is year 4 of a bull market that begin in 2020 or year 2 of a bull market that begin in 2022 would seem to have little predictive power of how much longer equities will rally, assuming again that Covid distortions will skew historical trends.