A New Bull Market and the Most Recent Bear

In January, the S&P 500 (market) established a new all-time high, which has since been beaten several times. During March alone the S&P 500 would mark eight new historic highs. January’s initial closing high would come two years after the previous high back in January 2022. We are in the midst of a new bull market. Declaring when the bull market initially begins can be debatable, but a new all-time high settles the debate. Investors waiting on the sidelines for signs to buy have missed a market rise of 45% as of the market close April 5th.

The definition of a bear market is straight forward and easily understood. It is a peak to trough decline of 20% or more. It is only with the benefit of hindsight that one knows for certain that the October 2022 low would in fact be the bottom for the most recent Bear market and mark the beginning of a new bull market. Many argue that the bear market ended in June 2023 after the market had climbed more than 20% from its low. This argument distracts from long-term investing goals and does not serve investors well. It only benefits market prognosticators and those pitching market timing. The market bottom in the fall of 2022 did not illicit a call from forecasters to buy stocks. The market timers said be cautious, “This could prove nothing more than a bear market rally.” Well, since then the market has continued its climb higher with a series of new highs throughout the first quarter of 2024.

Despite the market’s 45% rise from its low, the bears will point to a litany of concerns that play into fears. This bull market has been greeted by hand wringing and criticism rather than excitement, which counterintuitively bodes well for its durability. We know from history, the ten bull markets since 1957 have averaged over 5 years in length and have risen on average a cumulative 112%. This compares favorably with bear markets, which over the same period last less than a year and average a decline of 33%.

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The path getting here, as is often the case, was not so straightforward. From the previous high established in January 2022, the market would take over nine months before finally finding a bottom its low). This in fact turned out to be a typical bear market in both its duration of nine months and its 25% decline.

Unsurprisingly, much more time and energy are spent writing and discussing bear markets than bringing attention to a bull market. Perhaps there is a predilection to obsess over bad news or disbelieve the positive forces driving the market higher. I have heard some exclaim, “How can the market be higher when oil prices are high, war rages in Gaza and Ukraine and a Presidential election loom?” Both the US economy and the stock market continue to surprise to the upside. If one looks for reasons to avoid investing in the current market, one can find them. Taking a longer-term approach allows an investor the perspective to look past near-term headlines to a resilient economy and strong company earnings, both of which have helped boost the market higher.

The S&P 500 would climb over 10% higher during the first quarter of 2024. At Curran we will continue investing in quality companies for the long term. Looking ahead, there will be moments of concern and unfortunate events. Unfortunately, that is a near certainty. Despite these concerns and risks, we will continue to look for companies that can weather the turbulence and drive your portfolio higher through our disciplined, time-tested approach.

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Best,

Kevin T. Curran

Co-CEO & Chief Investment Officer

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