Happy Birthday, Bull Market... And Here's to a Couple More
The bull market we're in just celebrated its third birthday...
The S&P 500 Index hit a bear market low on October 12, 2022. (Remember, the Federal Reserve jacked up interest rates to combat inflation in 2022, which helped send the market into a 25% decline.) Since that low, however, the market has returned about 90%.
Even though stocks keep making new highs, worries loom about an AI bubble, a weaker labor market, President Donald Trump's tariffs... you name it.
But as we'll show you today, history tells us that now might be a great time to buy stocks...
According to data from Yardeni Research, eight bull markets since World War II have hit their third birthday. On average, they lasted about 6.8 years and returned more than 230%.
We're still a far cry from both of those averages.
Also, according to CFRA Research, we typically see big market gains in the fourth year of a bull market.
Since 1947, bull markets have averaged gains of about 13% in their fourth year. The best fourth-year gain was 30%. The worst was a small loss of 2%.
So while it's easy to see markets post three straight years of gains and feel like the good times can't continue... think again.
On top of all that, it has historically been a smart strategy to buy stocks when they hit fresh all-time highs.
The chart below includes data from 1975 through 2025. Over those 50 years, buying the S&P 500 at record highs outperformed buying when the index wasn't at record highs. Take a look...
So while you typically hear the saying of "buy the dip," it's also a profitable strategy to "buy the high."
As I (Jeff Havenstein) have talked about before in this newsletter, bull markets don't die with a whimper. They end when everyone goes "all in," falsely believing they can't lose when they invest in stocks. Bull markets end when folks are euphoric.
We saw this toward the end of 2021 as everyone poured into technology stocks despite their extreme valuations. We saw this in 2007 when everyone believed housing was invincible. And we saw this in 2000 when folks put everything they had into dot-com stocks that didn't produce any revenue.
We're not there today.
Investor sentiment is high. But it's not euphoric.
Just take the American Association of Individual Investors' ("AAII") Investor Sentiment Survey, which asks investors whether they're bullish, bearish, or neutral on the stock market over the next six months.
As you can see below, bullish readings still have a ways to climb before they hit extreme levels...
If things ever look like they're getting frothy, we'll let you know. But we're not there yet. Right now, all signs tell us that this bull market still has a long life ahead of it.
So don't be afraid to buy the market at all-time highs. Otherwise, you may miss out on a couple years of strong gains.
What We're Reading...
- Something different: "AI said I had Lyme disease before a doctor did."
Here's to our health, wealth, and a great retirement,
Jeff Havenstein
October 15, 2025