The bull market is getting old

After a spectacular 1Q earnings season, and despite geopolitical events, and some macro data, the U.S. equity market keeps making new all time highs. The concentration is historic, but investors believe it’s justified as AI will govern our lives pretty soon, and there will be very few winners, perhaps only one. The tables below remind us that we have been here before, and bull markets die on euphoria, and age. According to the table on the right, the current bull market for the S&P 500 started on October ‘22, which means the index has been climbing for 1,325 days. That’s way above average, and twice the median bull market in terms of age. It’s the 9th longest bull market on recorded history, and right on the average in terms of upside. But when it gets really interested is when you combine it with the table on the left. Almost all the bull markets above the current one, were followed by a bear market that erased almost a third of the gains. One of them, erased almost half. Notice also that bear markets are more rapid. All of them lasted less than 2 years. Using history as guidance, which is helpful but has some severe drawbacks, we might still have room to go up, but the bull market is getting old, on top of concentrated, expensive and leveraged. Handle with care.

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