Following last week’s upheaval over Turkey’s currency nosedive, this week proved remarkably calm in markets. There was a broad recovery and the US’ S&P 500 stock market index even hit an all-time high on Friday, which supposedly also now constitutes the longest bull market period. This had financial commentators around the world excited and musing about the probabilities that this long period would have to come to an end very soon – simply because of historical precedence.
I was therefore grateful that John Authers’ from the Financial Times pointed out that the length of previous bull markets had perhaps been somewhat arbitrarily defined by simply looking at the last time the market index fell 20% peak to trough as a starting point. Setting the starting point for the last prolonged bull market – which ended in 2000 when the dot-com bubble deflated – is ambiguous by that measure, because the S&P500 fell only very nearly 20% in 1990 after Saddam Hussein invaded Kuwait. It certainly fell the full 20% in 1987 (even in one day), which would mean that the current bull market has at least another 4 years before it breaks that record.
