Don’t look now fans, but the current secular bull market in stocks turns 8 years old today. Yep, that’s right; 8 years ago, today, Jamie Dimon stepped to the microphone on the White House lawn and reminded everyone that his bank not only wasn’t at risk of collapse, but was actually profitable – despite the nightmarish environment.
Bam. Just like that, the fears of the global banking system imploding were erased. Lest we forget, this fear was real in early 2009. As of March 9, 2009, the S&P 500 was already down something on the order of 25% for the year. And this was on top of the 38% decline that had taken place in calendar year 2008. As such, the fear that the sky was actually falling, was real.
Granted, the mark-to-market accounting rule that forced banks to write down all those nasty mortgage-related securities that no one wanted to buy/own to the current fire-sale prices was a primary part of the problem 8 years ago. And while Dimon’s presser gets a lot of credit for turning things around on that day, the fact that the mark-to-market rule was also changed right about that time was the real game changer.
Once the world realized that money market funds weren’t going to “break the buck,” that the banking system wasn’t going under, and that, if memory serves, something like 23 of the 30 DJIA stocks were selling for less than the cash on their balance sheets, the secular bear market that had been in place since March 2000 ended and a new secular bull market was born. A bull that continues today.
The Secular Trends
To keep things in perspective, we need to remember that within the context of secular trends, there are “cyclical” moves – something I call “mini” bulls and bears – and that multiple mini bull/bear cycles can occur within a secular move.
For example, the current secular bull market began on March 9, 2009 and as of March 1, 2017 had produced a gain of nearly 260%. But to be sure, the ride has been a bumpy one as a couple mini bull/bear cycles and any number of scary “crises” (usually having something to do with Greece) have occurred along the way. Below is a chart of the mini bulls and bears seen since 2011.
