Finance: Why The Longest Bull Market In History Will Continue

(Drivebycuriosity) - Coincidence or not, investors have two events to celebrate this week. On Tuesday the US stock market, represented by the S&P 500, reached a new all-time-high. Today investors have another reason to cheer: The bull market in US stocks, which started in March 2009, became the longest in modern history. Bull markets are defined as period of rising stocks without a 20% fall. This bull market has been running for 3,543 days by the end of yesterday.

On March 9, 2009, the panic on the financial markets squeezed the S&P 500, the gauge for the US stock market, into a trough of 666 points. Since then the market gained about 2,200 points, more than 320%. Stock prices have been driven by the restored global economic growth, by abating panic and by climbing company earning.

I claim that we are in a secular bull market that could be comparable to the period 1982 till 2000 when the Dow Jones jumped from just 800 points to around 10,000 points (even though there was a crash in 1988 and a small recession in 1990). I think this bull market could beat the bull market from 1990 through early 2000 which brought a gain of more than 400% (cnbc). My claim is mainly based on three arguments:

1. Company profits will continue their solid growth. During the recessions of the years 2001/02 and in 2008 companies restructured and reduced costs significantly in order to survive. Now they are much fitter and more efficient than before. I believe that this learning process will continue and will translate into a long term trend of rising company profits.

2. We are experiencing a new industrial revolution.  Advances in Internet, mobile computing, 3-d-printing, robotics, nano- & biotechnology and other technologies are reducing costs, raising efficiency and creating new markets.

3. We also are having solid tailwinds from the emerging markets which are even getting stronger. The catching-up process in China, India, Indonesia and a lot of other countries translates into high growth in large parts of the global economy that creates continuously rising revenues & profits for global companies like Starbucks, IBM, Caterpillar, Apple and other members of the S&P 500 (world).

Enjoy!