This is an historic day. The US is celebrating the longest stock market bull run in its history, which has now lasted a record 3,543 days. Wave the flag, praise mom and pass the apple pie, the American stock market is great again!
Record rally
Few would have anticipated this in the dark days of March 2009, when the rally began. The global economy was only spared meltdown by extraordinary measures such as near zero interest rates and quantitative easing. The medicine took effect and investors have seen the results in their portfolios.
If you had invested, say, £10,000 in the S&P 500 at the market low your money would now worth £45,500, according to Hargreaves Lansdown. With dividends reinvested you would have £55,500. Most of us are unlikely to have invested at the very bottom of the market but even so, big money has been made and investors are also enjoying a dividend bonanza.
Cheap and cheerful
UK stocks have also been on a charge, although ours does not technically qualify as a bull market run because of bearish intervals in 2015 and 2016, when UK-listed oil and mining stocks were hit particularly hard by the commodity slump. Despite that, £10,000 invested in the FTSE All-Share would be worth £32,600 today, with dividends reinvested. Investors who use their Isa or SIPP allowances can take this money tax-free.
This may be the longest US bull run, but it is not the most lucrative. The previous record, from October 1990 to March 2000, saw Wall Street rise 417% against 320% this time. That one generated more excitement too, whereas the current one has been labelled the bull market that nobody loved, because we know asset prices have been inflated by all that cheap money.
Love it or leave it
Some are struggling to feel the love today. The milestone has brought out the doomsayers instead, who are predicting the end is nigh. The fact that they have been predicting this since March 2009 and been wrong every time does not deter them.
Instead, they note that US stock valuations have only been higher on two occasions: in 1929, before the Wall Street Crash, and in 1999, before the dotcom bust. The S&P 500 currently trades at 32.9 times earnings, according to economist Robert J Shiller, although with the US economy growing at more than 4% a year, it could have further to run.
The UK does not look particularly overvalued, trading at 15.8 times earnings against its long-term average of 14.3, and well below the 26.7 registered at the height of the tech boom.
Buy the bear
Nothing lasts forever and and this bull will die at some point. The US Federal Reserve could kill it with further interest rate hikes. Turkey and Venezuela could be signalling an emerging market storm. That long-feared black swan could finally move into view.
When will it happen? Nobody knows. They never do, except in retrospect. Then everybody knew.
And it could be good news, providing you can leave your money invested for the long term and don’t sell in panic but take advantage of any crash to top up your portfolio and wait for the inevitably recovery. Investing when markets are down is a good strategy. Just ask anybody who bought in March 2009.
