What Bull?

On my desk is a chart with S&P 500 data going back to 1929, almost 100 years.  What does it show?  The number of new highs set by the S&P 500 each year, over that time period.  It’s fascinating for those of us who study trends.

Through 1960

In 1929, the S&P 500 set 45 new closing highs.  And didn’t set another one until 1954.  In ’54, the S&P 500 set 27 new highs, followed by 45 in ’55 and 14 in ’56.  24 new highs were set in 1958 followed by 27 in ’59.  1957 and 1960 blanked.  In general, the second half of the decade of the ‘50’s were good for investors after a 25-year drought.  Happy Days were here again, families were growing, and the Greatest Generation were in their prime.

1961 Through 1968

The next nine years were a bull run with 53 new highs in 1961, none in ’62, and then new highs every year through 1968.  During this time, the S&P 500 averaged 28 new highs each year.

1969 Through 1979

And then?  Blanks in 1969, 1970, 1971.  32 new highs in ’72 and three in ’73, though these came early in the year.  And from 1974 through 1979, the national malaise infected the stock market, with no new highs. 

1980 Through 2000

The next 21 years saw new highs every year except 1981, ’84, and ’88.  Those years also featured the longest bull market run before or since.

2001 Through 2012

And with the tech wreck, a break.  During this twelve-year stretch, only five new highs were set by the S&P 500, and they all took place in 2007.

2013 Through 2021

Not unlike the ‘60’s, this nine-year stretch saw new highs every year with the S&P 500 closing at 4793 on December 29th, 2021.  The first business day of 2022, January 3rd, the S&P 500 closed at 4796, an all-time high that still stands.  And this nine-year stretch saw an average of 38 new highs each year.

Why this history lesson?

Cycles and Trends

First as a reminder that everything cycles.  That the S&P 500 not setting new highs every month is part of long-term trends, a part of the journey, and not a reason for panic.

Looking Back

During the ‘30’s, the country struggled with the Great Depression, the role of government, and a national identity.  The sectors which did well during this decade were alcohol and cosmetics.  A focus on victory in WWII gave our country a new vision and laid the foundation for the economic growth experienced during the second half of the 20th century.

The late ‘60’s and through the ‘70’s saw another period of internal reflection as we again redefined the role of government, the concept of a just war, and America’s place in the world.  And while we reflected, the stock market took some time off.  The sectors which did well?  Oil, as OPEC restricted access.  And real estate, as the early boomers began household formation.

Looking Forward

Will the S&P 500 take a year or two break or more, before it sets another new high?  We don’t know.  This decade feels and looks like part of a 50-year super cycle.  We will know that only in hindsight.  And whether it is or isn’t part of such  super cycle doesn’t necessarily correlate to a multi-year break in new highs for the S&P 500.

The instruction we take from multi-decade trends of the S&P 500?  There are better times than this decade to be all-in on index funds.  As we have noted before, we believe a focus on dividend-paying stocks, purchased at points where price is low relative to dividends, will serve you better over the next decade than simply buying the low-cost index fund of the day.

As always, we appreciate you making time to read our notes.

And until we see you again, wishing you only the best. 

Warm regards,

Randy