Visualizing the 12 Historic U.S Bull markets

A good time to look at the past bull markets as the longest one in history gets threatened by a pandemic

Global markets have seen a deluge of selling in the past week or so. The mounting risk from the Coronavirus pandemic has seen investors flee risky assets to the safety of gold, bonds and treasuries. After the rout of almost 3% in all three major U.S indices, some were expecting a reprieve today, at least a partial one. Even though the markets started on a positive note with the Dow rising more than 400 points, it fizzled out in the afternoon to close near its lows.

A week of heavy selling in the global markets has seen the MSCI All-Country World Index fall 5%. However, individual countries like the U.S and Italy have taken the brunt — with the S&P 500 down 8.4%, its steepest decline since the end of 2018, and the Italian stock market is down 9%.

It is probably the right time to take a look at the previous twelve U.S bull markets to see how markets have fared over the long-term. Today’s infographic comes from New York Life Investments, which highlights every bull market since the second world war. For the sake of the visualization, bull market is categorized as the ones which rise 20% from their lows.

While you can see that every bull run differs from the other in terms of the length, Compound annual growth (CAGR), the percentage change in the S&P 500 and the factors behind each, the end result is the same. We are going to look at four of the most significant ones to get a snapshot.

World War II (1942–1946)

Following the attack on Pearl Harbor by Japan in Dec. 1941, the sleeping giant was awakened. The American government mobilized the war machine, which kickstarted the massive economy. The creation of several agencies to regulate and control the economy led to 17 million new jobs and brought the U.S. unemployment rate to a record low of just 1.2%.

Corporate taxes doubled and income grew for all Americans across the board. This era saw a 158% increase in the S&P 500 but more impressively recorded the second-highest CAGR of 26% among the 12 bull markets.

Reaganomics (1982–1987)

President Ronald Reagan’s Economic Recovery Tax Act (ERTA) ushered in the bull market of the Eighties. The policies were based on supply-side economics — works on the premise of reducing taxes, which then incentivizes individuals and businesses to spend more, thus providing impetus to the economy.

The lowering of the highest tax bracket from 70% to 50% and the lowest from 14% to 11% resulted in a bull market spanning over 60 months. The S&P 500 grew by an impressive 229%, while the same period provided the highest CAGR of 27%.

Roaring 90s (1990–2000)

The main drivers of this bull market were the increased globalization caused by the free movement of trade, labor & capital. In the later cycle of the 113 months bull market, the dawn of the Internet age and emergence of dot-com companies propelled the indices to all-time highs. This market expansion recorded the highest gains of 417% in the S&P 500.

Post Financial Meltdown (2009-Present)

The inevitable is eventually going to happen, and the recent black swan event might just be the catalyst for that. Despite that, this has been a record-breaking bull market of 131 months so far. After the financial armageddon of 2008, which resulted in a massive meltdown, the U.S markets have staged a long, slow recovery. This bull run has given us a gain of 400% in the S&P 500.

You can be sure of only one thing about markets, they have a mind of their own and they will continue to surprise us. Will this be the end of the longest-running bull market… we will soon find out.