This article was originally published on ETFTrends.com.
The current bull market, which began on March 9, 2009, has garnered an impressive 468% gain for the S&P 500 through the first day of November, making this record-long bull run also the best-performing market since World War II, according to The Leuthold Group. The S&P 500, which barely marked a record closing high on Wednesday, has climbed 471% in this epic run.
Looking back at markets historically, there was another bull market that generated a 454% gain for the S&P 500. The bull market from 1949 to 1956 had second biggest return in recent history, the firm said. Other notable bull markets included the expansive run in the 1990s, where the S&P 500 rallied 391%, and the bull market of 2002–2007, which generated a more muted 121% gain for the benchmark, according to The Leuthold Group.
One unique aspect of markets is that they are driven by the human emotions of fear and greed. Nobody wants to miss out on a bull market move higher, but investors simultaneously hesitate from fear, seeing how the move has already traveled so far without them. As a result, they wait on the sidelines until suddenly the pain of missing out is overcome by to greed, causing investors to jump in with both feet, often at the top. This cycle is what drives markets higher and then allows them to come back to earth. As famous stock trader Jesse Livermore said, “Markets are never wrong – opinions often are.”
“I don’t think you can blame people for being a bit cautious or skeptical,” said Sam Stovall, chief investment strategist at CFRA Research. “If anything, earnings growth for this year has come down, and earnings expectations for next year have come down.”
There is one variable that significantly sways markets that have also been lackluster this year: earnings. The S&P 500 is in the midst of an earnings recession that is headed toward the third consecutive quarter for negative year-over-year growth. Despite a 76% beat rate compared to expectations, earnings are still anticipated to display a 2.7% decline in the third quarter, according to FactSet.
“We’ve got an explosive combination of monetary and fiscal policy right now,” infamous trader Paul Tudor Jones told CNBC’s “Squawk Box” on Wednesday. “We’ve got a 5% budget deficit coupled with the lowest real rates that you can image with the economy at full employment. That’s the most unorthodox, and potentially explosive, combination that you can imagine.”
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