The Bull Market's Uncertain Future: A Critical Analysis of its Survival

Strategic Insights -

The U.S. stock market has seen a remarkable turnaround, gaining nearly 89 percent since the start of the bull market during the Biden administration in October 2022. Despite concerns about tariffs, inflation, and trade wars, the market has managed to persevere, with investors in low-cost S&P 500 index funds nearly doubling their money. However, the question remains: will the bull market continue or does it face an uncertain future?

Key Takeaways:

  • The bull market has gained nearly 89 percent since its start in October 2022, with investments in low-cost S&P 500 index funds returning over 97 percent.
  • The market has survived several setbacks, including President Trump's tariffs and various downturns, with investors in low-cost index funds nearly doubling their money.
  • According to Keith Lerner, chief investment officer at Truist Advisory, the bull market is not officially over until it has risen above its last peak, which occurred on October 8, 2022.
  • Despite concerns about the economy and market fundamentals, Lerner points to seven previous bull markets that survived for at least three years and then gained further, with a median increase of 13 percent in the subsequent year.
  • The current bull market faces challenges from tariffs, inflation, and trade wars, with an escalation in the trade war between the United States and China on October 10.
  • Despite the uncertainty, investors are optimistic about the future of artificial intelligence and its potential to fuel the growth of both the economy and the stock market.

Statistics:

  • The S&P 500 stock index has gained nearly 89 percent since October 12, 2022.
  • Investments in low-cost S&P 500 index funds have returned over 97 percent since the start of the bull market.
  • The effective U.S. tariff rate is above 17 percent, the highest level since the 1930s.
  • Seven previous bull markets that survived for at least three years went on to gain further, with a median increase of 13 percent in the subsequent year.
  • The S&P 500 is likely to report earnings growth above 13 percent for the third quarter, marking the fourth straight quarter of double-digit growth.

Sources:

  • CNN (October 31, 2022)
  • FactSet
  • S&P Dow Jones Indices
  • Truist Advisory ( Keith Lerner)
  • LPL Financial (Adam Turnquist)
  • FactSet (John Butters)