Good News: Strongest Bull Market Since WWII

It seems like such a long time ago. American icons General Motors and Chrysler were getting bailouts, the big banks were being merged, and after a year and a half of steep losses we all were wondering if the stock market would ever stop falling.

Now, three years later, we marked the third anniversary of the bull market on March 9, 2012. And it hasn’t been just another bull market. This has been the strongest bull market since WWII, with the S&P 500 Index up a little over 100% in the past three years.

As the bull market enters its fourth year, many of us are questioning how far stocks will continue to climb after doubling in three years. Although the markets will likely renew the volatility that characterized much of the past three years, we believe the bull market will persist. What might spur on the bull for a fourth year?

1. The confidence of consumers is rising. Retail sales have been posting solid gains. And, as a sign of improved confidence, consumers are beginning to borrow for the first time since the financial crisis and ensuing bear market.
2. The employment picture is improving. The weekly total of first time filings for unemployment benefits has fallen to a four-year low. The U.S. continues to add approximately 200,000 private sector jobs each month, most recently in construction, health care, leisure and hospitality, and manufacturing.
3. U.S. manufacturing trends are encouraging. One of the mainstays of U.S. manufacturing—the auto industry—is resurgent. Auto sales reached 15 million vehicles in February, the highest level since 2008. And U.S. vehicle production schedules look robust so far in 2012 as demand is helped by increasing access to credit and continuing consumer confidence.

These positive facts for the bull market are further supported by historical bull market performance. Six of the past seven bull markets since WWII lasted more than four years and the average return in year four of those bull markets has been a solid 12.7%.

Obviously, bull riding can be a rough, though potentially rewarding, experience. There are still areas of concern for investors– for example, high gas prices, slowing earnings growth and fiscal challenges. However, current trends and other positive U.S. economic data, all of which have been gaining momentum, could spur on the record-breaking bull market ride to a fourth year.

About John Colegrove:

John Colegrove provides hometown investment advice in Peachtree Corners.  He is a Financial Advisor and Branch Manager though LPL Financial.  To learn more about his practice, visit his website at www.JohnColegrove.com

Securities offered through LPL Financial, Member FINRA/SIPC

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.