Young Bulls & Old Habits
How about this bull market that’s now being described as over nine years old, eh?
In stock market years, that’s like calling it a Zimmer-framed financial thrombosis-in-waiting.
So, let’s try putting a little perspective on the life and times of this bull that was allegedly born in March 2009.
A bear market is defined as a 20% retrenchment from the market's peak.
So, that means we’ve actually seen two bear markets since 2011.
From 2nd May 2 2011 to 4th October 2011, the S&P 500 index dropped 21.6%.
From May 2015 to February 2015, the Russell 2000 fell 25%, and the Value Line Geometric Index fell 26%.
Heck, we nearly had a short bear market at the start of 2016 when the end of the world had arrived with "cheap oil" and "unbearable deflationary pressures."
We've actually experienced two (and technically three) short bear markets in the last seven years.
And thisbull is nowhere near 9+ years old.
A Few More Facts
As a country, over here in America we’ve never been wealthier.
And I can call that “official” because the latest Fed statements covering households are out.
They tell us that household leverage as a whole has not been this low for three decades.
Yet, about 14 seconds ago there was a headline somewhere telling everyone we’re too leveraged.
Folks, we’ve lived through far worse; and every single one of those periods is well below current prices and values on just about everything.
Let's take a look with a couple great charts from Scott Grannis of The Calafia Beach Pundit blog:
A Couple of Highlights
The first chart is one way of slicing and dicing the data.
And while it’s great to see that the deep blue bar showing US net worth is clearly at all-time highs - and far higher than it was during the lead up to the Great Recession - I prefer we look at the smallest bar: The purple ones.
Those are the ones that show us debt levels.
Note how tiny that bar now is. In fact, it appears almost insignificant, with near immeasurable differences in growth of those levels since 2007.
The second chart shows you US household net worth from the perspective of annualized growth over extended periods of time.
From this we can see that, after having been under the normal per annum growth curve rate (the green line) going back to 1950, we have now edged back above it!
And the last chart is yet another view of this data.
It shows the average leverage of US households has now fallen back to levels not seen since the early 1980s.
And once again that time window arrives like a signpost: The early 80's.
That was the launch of the longest secular bull market run in history.
And we did the same things back then as we’re doing now; failing to extend our thoughts towards a better future.
So here we are after all that fretting, surrounded by positive market, economic, demographic and technological growth facts…and yet too often choosing to believe in all the negative headlines.