The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
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For History Students Only

When we look at stock market cycles, we know the current bull market is getting old — over five years old.  However, if you look only at bull markets that follow at 30% decline, it is a very different perspective.  The deeper the bear drop in the stock market, the longer and strong the bull recovery.  Our stock market drop of 52% in 2008/9 was terrifying, but it did set the stage for an impressive bull run since then.  Now, take a look at this chart:

Chart of the Day
Over the last 114 years, there have been 13 recoveries, averaging 8.8 years each.  Of those 13 bull runs, 6 had a shorter duration than the current one, and six had a longer run.  We’re in the middle.  However, because our 52% drop was substantially greater than the 30% minimum, one can easily argue that this recovery will be much longer and stronger than average.
I hope so!
But, please note one big difference:  Never before have we sustained a major economic recovery on such a sea of debt — except for the longest and strongest recovery of all, labelled 1942 above.