As the S&P 500 Index is nearing the end of another consecutive year with over 20% gain, many analysts are worried about the “frothy valuations” citing several indicators. However, Carson Research, in its latest blog post says that “we are in a bull market and it is alive and well.”
What Happened: According to Carson Research the “bears” have been “apologizing” as many have been changing their stance and outlook toward the current market conditions.
The note written by its chief market strategist Ryan Detrick, 2024 “would go down as the best election year return ever,” as the S&P 500 Index has made 56 new all-time highs.
He also highlighted that the current bull market is nearly 26 months old and is now up more than 70% from the mid-October 2022 lows. “But the good news for investors is that once previous bull markets got to this point there were many more years of gains left,” he said.
According to the note, “Going back 50 years, we found five other bull markets that had lasted at least this long and the shortest any of them lasted was five total years. Think of it like a cruise ship — once it gets moving, it can be quite hard to stop.”
In the graph shared by Detrick, he highlighted the August 1987 and October 2007 bull markets which lasted for five years each, the November 1980 bull market which lasted 6.2 years, and also March 2000 bull market which lasted for 12.3 years.
Why It Matters: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust, Series 1 QQQ have gained 27.54% and 29.31% on a year-to-date basis. Whereas, iShares Russell 2000 ETF IWM tracking the Russell 2000 Index grew by 18.63% this year.
The Dow hit a record eight 1,000-point milestones this year and November was a huge month for small caps, with the Russell 2000 up by 10.9%.
“We found 22 other times the Russell 2000 gained at least double digits in a month and six months later it has been higher 90% of the time and a year later up a very solid 15% on average,” the note said.
The note also quotes David Rosenberg of Rosenberg Research issuing an apology. “It's high time for me to stop pontificating on all the reasons why the U.S. stock market is crazily overvalued and all the reasons to be bearish based on all the variables I have relied on in the past — from valuation, to sentiment, to overcrowded positioning,” Rosenberg said.
He further added in his piece titled, Lament of a Bear that he will start “assessing what it is the market is saying, because the market can certainly move to excesses in both directions and make faulty assumptions, but the market is not stupid.”
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