Photo: Flickr/Amy Loves Yah
The S&P 500 is near an all-time high. But everyone’s wondering if the current bull market will last.Sam Stovall, the market historian at S&P Capital IQ, says yes.
In his latest note, he argues that while there may still be a dip or two, a year from now we’ll all be celebrating the bull market’s fifth birthday.
First, though, he says we shouldn’t have been surprised we made it to year four:
If the bull market had to worry about infant mortality in year three, the fourth year bull benefited from the law of ageing. If one makes it to age 65, they have a great chance of making it to age 75. And the same goes for bull markets. Make it past year three and you have a great chance of celebrating your fourth birthday. The average price increase during the fourth year of a bull market since 1947 was a shade below 13%, and only one of the eight bull markets that celebrated their third birthday failed to celebrate their fourth. In addition, only one did not post a positive price performance in year four.
As for year five, not only is it coming, but it may be one of the best birthdays ever:
Since WWII, the S&P 500 turned on the after-burners in year five, with the remaining bull markets averaging a 21% increase in price — four of which were in double digits. In addition, four of the five bull markets went on to celebrate their sixth birthday.
In closing, Stovall says we can expect a a pullback in the next few months if we hit a new all-time high. However, we should also prepare to bring presents in 2014.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.