“Some people think a bear market automatically results in a loss of 40% or
50% of their money,” he says. “It’s not that high.” By his calculations,
the average bear market loss for the S&P 500 is 33%. The average bull
gain is 172%.
The current S&P bull started on March 10, 2009, when the index, which
had been in decline for months, rallied by 6%, en route to a 10.7% weekly
gain. It has not dropped by 20% in closing trading since then. (A 20%
decline from the high is the number economists generally regard as
signalling a bear market.)
There were a few close calls, notably in 2011 and again in 2015-16. But
both times the S&P decline stopped just short of the 20% figure. You
can find a descriptive time line of the bull at:
Although this is arguably the longest bull in the history of the S&P
500, it is not the most profitable one. That honour goes to the 1990s tech
boom, which saw the index soar by 417% before the bust hit. This time
around, the gain to date is only 323%.
In terms of compound annual growth, the current bull only ranks eighth out
of twelve since 1942. The number-one spot is held by the bull market of
1982-87, which saw the S&P 500 rise by an average of 26.6% per year.
It’s worth noting that the Toronto Stock Exchange does not share in this
record run. It has twice dropped more than 20% over the same period.
There are signs of some erosion around the edges of the S&P bull, Mr.
Joyce says. Share prices are high (although not as high as during the tech
boom of the 1990s), and rising interest rates, increasing wage demands, and
higher input costs from tariffs and commodity prices will eventually eat
into corporate profits. Uncertainty over trade policies may also have a
negative effect on investment decisions, which would hamper growth.
However, none of this will happen overnight. “Net earnings drive markets
higher, and we believe we have several strong quarters still to come,” he
That said, Mr. Joyce cautions it is unrealistic to believe that there won’t
be another bear market. “It could come along any time,” he says. While he
doesn’t think it is imminent, any number of unforeseen factors could
For that reason, his company’s investment strategy is shifting towards
neutral in its balance between equities and fixed income. He urges
investors to re-evaluate their own portfolios in this context and decide
whether they are in a comfortable position to deal with a bear market when
Where to invest
Where should you invest? On the fixed-income side, he recommends
high-quality bonds over high-yield bonds for safety reasons. High-yield
bonds (often called junk bonds) will be vulnerable in a recession. Bonds
with a high credit rating will provide portfolio stability in a stock
On the equities side, he advises overweighting Canadian stocks, based on
reasonable valuations and good earnings. He is also still positive on U.S.
stocks, despite high prices, due to the continued strong earnings outlook.
But underweight emerging markets, he suggests. They are too volatile in the
“Don’t get hung up on this longest bull market milestone. It’s history,” he
concludes. “But if it prompts people to reassess their portfolios and their
objectives, that’s good.”
is one of Canada’s best-known personal finance commentators and
investment experts. He is the publisher of
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Notes and Disclaimer
© 2018 by The Fund Library. All rights reserved.
The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned carry risk of loss, and no guarantee of
performance is made or implied. This information is not intended to provide
specific personalized advice including, without limitation, investment,
financial, legal, accounting, or tax advice. Always seek advice from your
own financial advisor before making investment decisions.
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