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Lessons From the Longest Bull Market in U.S. History

A few facts to keep in mind about your investments

Bull statue on top of a stock chart

Adam Gault/Getty Images

Wednesday marked the longest bull run in U.S. stock market history, hitting 3,453 days and breaking a record set between 1990 and 2000. If you had the courage to put $10,000 in a total stock market index fund when the market bottomed out March 9, 2009, you’d have about $53,000 today, or roughly 5.3 times the amount for a 430 percent gain. That makes it hard to imagine we’ll ever see that bear again — but we will, so use these lessons as you invest going forward.

Bulls begin when the financial news is the worst. Late 2008 and early 2009 was a very painful time for investing. General Motors was flirting with bankruptcy, and two huge, long-established Wall Street investment banks, Lehman Brothers and Bear Stearns, became extinct. Many said it was a new paradigm for investing. Conversely, bears often begin when the financial news is great. Lesson: Don’t assume our rosy economy means the bull will continue.

Investors and investment advisers time markets poorly. When stocks were on sale after the financial meltdown of the last decade, investors pulled money out of stock mutual funds, according to the Investment Company Institute. In fact, there is strong evidence that advisers time the market poorly as a whole.

It doesn’t work every year, but the tried-and-true strategy of buying low and selling high still tends to work in the long run. Rebalancing your portfolio to get back to your targeted stock allocation has boosted returns as it systematically buys stocks after plunges and sells after surges. If you don’t want to go through the work of doing this for yourself, a target-date retirement fund can do that for you

Time in the market is more important than timing the market. No one can time the market, so it’s a bit disingenuous to show how buying stocks at the bottom returned 5.3 times the initial investment. Still, even if you had the worst timing in the world and bought that same total stock index fund when the market peaked Oct. 9, 2007, your $10,000 investment would be worth about $23,900 today. Of course, that would have required doing nothing except letting the dividends reinvest.

Graph: Returns Since the Bull Began, Total return of stock index fund vs. DJIA Index


Index returns aren’t market returns. I noted earlier that U.S. stocks more than quintupled, but articles I’m reading now say the Dow Jones Industrial Average (DJIA) only quadrupled. The S&P 500 index is about 4.24 times its value at the start of the bull. What gives? These indexes are not the entire U.S. stock market and don’t include dividends. The DJIA, for instance, is only 30 stocks that are not even weighted by size. Don’t let someone tell you they are beating the market by comparing their total return to only an index return.

Capitalism trumps politics. The bull market began shortly after President Barack Obama took office and has so far continued under President Trump. Yet so many people on both sides of the political spectrum came to me making costly bets against America. They were sure U.S. stocks were going to plunge. Capitalism is likely to continue to be stronger than even the most dysfunctional political climate. 

Neither good nor bad times last forever. As bad as things were in 2009, they didn’t last forever. And as good as things seem now, that won’t last forever, either. Yet it seems we are either resistant to learning from history or have some kind of investing amnesia.

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Today, just like in 2007, I’m seeing clients come to me saying they want to be 100 percent in stocks because they know stocks will win over bonds in the long run. The people who said that in 2007 were the ones I spent the most time with after the plunge talking them out of selling. They somehow forgot the pain they felt during the dot-com stock bubble at the beginning of this century. Human behavior is as predictable as markets are not, and that behavior is to buy stocks in good times and sell in bad. In short, we are predictably irrational beings. Whether we’re in a bull or a bear market, being successful investors requires us to accept that inescapable truth.

Sure, many of us can celebrate the oldest bull market in history. But remember: It’s easy to be a good investor in good times. A key to investing is what one does in bad times. Those bad times will eventually come.

Try to remember the pain of the distant bear market. If you still have them, pull out your February 2009 investment statements and remember what you were thinking then and whether you sold some stocks. Make sure your current portfolio is allocated so that you can withstand a bear market when it does come.