Market Momentum: Understanding the Cycles of Bull and Bear Markets
The stock market has been on a remarkable upward trajectory over the past two years, with the S&P 500 surging by over 65% since its October 2022 low. The Nasdaq has also seen a significant increase, rising by around 87% in the same period. However, with this growth comes concern about the market’s sustainability.
Investor Sentiment: A Mixed Bag
According to a January 2025 survey by the American Association of Individual Investors, over one-third of U.S. investors are bearish about the market’s prospects over the next six months. This sentiment is understandable, given the market’s volatility. Yet, history suggests that bull markets tend to outlast their bearish counterparts.
The Average Bull Market: A Historical Perspective
Data from Bespoke Investment Group reveals that the average S&P 500 bull market between 1929 and 2023 has lasted approximately 1,011 days. In contrast, the average bear market has persisted for around 286 days. More recent bull markets have been even longer, with three of the last 10 lasting over 2,000 days.
What This Means for Investors
As of this writing, we are 820 days into the current bull market. While this could suggest that we may have around six months left before the next downturn, it’s essential to remember that the market is inherently unpredictable in the short term. Averages can provide a rough guide, but they cannot predict the future.
The Power of Consistency
Rather than trying to time the market, a more effective strategy is to invest consistently, regardless of market fluctuations. This approach, known as dollar-cost averaging, involves investing at regular intervals throughout the year. By doing so, you’ll smooth out the market’s ups and downs, reducing the impact of short-term volatility.
A Long-Term Outlook
History has shown that every bear market has been followed by a bull market. By maintaining a long-term perspective and continuing to invest, you’ll increase your chances of achieving positive total returns. In fact, if you were to hold an S&P 500 index fund or ETF for 10 years, there’s only a 6% chance of earning negative returns.
Investing with Confidence
While it’s natural to worry about market downturns, a consistent investment strategy and a long-term outlook can help protect your portfolio. By focusing on the bigger picture, you’ll be better equipped to navigate the market’s cycles and achieve your financial goals.
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