The S&P 500 has advanced more than 30% since the start of the new bull market.
The S&P 500 (^GSPC 0.15%) climbed last year, but one big uncertainty remained: Was this a temporary rebound or were we experiencing the early days of a new bull market? To confirm a bull market, an index must hit a new record high, and that hadn't yet happened.
But the early days of 2024 swept away this uncertainty as the S&P 500 reached its highest level ever, signaling we've been in bull territory for quite a while -- since the index started rebounding from its bear market low in late 2022. This is fantastic news, but now you might be wondering about what to expect from the market in the coming months or years. And that's where we can glance back in time and find out what history suggests could happen next.
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Bull markets have lasted longer than bear markets
The market has experienced four bull markets since the mid-1970s, and they've all lasted longer than bear markets during that time period, spanning more than 8 years compared to 1.4 years for bear markets. This is according to data compiled by Raymond James & Associates. So, the idea that bull markets stick around longer than bear markets already is pretty good news.
Now here's the part about what may happen next. The data also show that these past bull markets resulted in triple-digit gains for the S&P 500 and double-digit annualized returns for the index. Since the start of the new bull market, the index has climbed about 38% and has advanced only about 4% so far this year. So, if the S&P follows the annualized and total return trends of the past, it has plenty of room to run in 2024 and beyond -- and may deliver a double-digit increase this year and a triple-digit one by the end of the bull market.
That's terrific, but it's important to note that just because the market performed in a certain way during past bull markets doesn't guarantee it will do the same this time around. So, why should we look at past trends? Because a pattern that repeated itself often enough allows us to prepare for an outcome that could happen again. And if it doesn't, we'll be prepared too because, as always, it's best to build your portfolio for long-term performance rather than gains just during one particular market phase.
Here's how to do it. First, to benefit from the current environment -- in this case a bull market -- you could adjust a few elements that may boost performance. But do this without overhauling your entire portfolio. For example, if you're a cautious investor don't sell off your safe and steady pharmaceutical players or your dividend stocks -- but you might want to add a few more growth stocks to the mix. If you're an aggressive investor who already favors growth stocks, you may want to look for bargains among growth players and load up.
Growth stocks could offer your portfolio a lift
Growth stocks generally thrive in bull markets or times of economic expansion and recovery, so they could offer you an extra lift in this kind of investing environment. We saw this last year, as gains in stocks like e-commerce giant Amazon, chip powerhouse Nvidia, and Google parent Alphabet (GOOG -0.16%) (GOOGL -0.17%) led indexes higher.
And some of these growth stocks still remain fantastic buys. Alphabet trades for only 21x forward earnings estimates which looks dirt cheap considering the company's earnings strength and the fact that analysts expect double-digit annual growth from Alphabet over the next five years. The company's investments in artificial intelligence (AI) are set to improve its biggest moneymaker, Google Search -- and that should boost advertisers' spending on the platform and lead to more earnings growth over time.
Of course, as you make some adjustments to your portfolio, remember to think long term by investing in quality companies with great prospects. Whether they gain during this bull market or not, they should help you win over time.
Finally, as mentioned above, no one can guarantee what the market will do next. But history offers us some clues about what might happen, and if history is right, the S&P 500 may have a lot farther to go in this new bull market.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy.
FAQs
After a spectacular 2023, stocks are off to the races again in 2024. YTD, the Dow is up 2.72%, the S&P is up 7.28%, and the Nasdaq is up 6.41%. (And that's on top of last year's 13.7%, 24.2%, and 43.4% respectively.) And the outlook is for another fantastic year.
Are we in the bull market now? ›
A new bull market is upon us. That's without question. But investors aren't feeling all warm and fuzzy given the declines over the past two days and what appears to be a dire start to the second quarter of 2024.
What is the bull market trick? ›
In a bull market, it's best to invest as early as possible. The earlier you invest in the market, the more of the market's rise you will enjoy. If you wait to buy at the market's peak, there's no place to go but down.
What is the quote about bull markets? ›
Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” In this quote, John Templeton, a renowned investor and mutual fund pioneer, expressed his observations about the typical lifecycle of financial markets, particularly the stock market.
What is the stock market prediction for 2024? ›
Earnings Rebound
Analysts are projecting S&P 500 earnings growth will accelerate to 9.7% in the second quarter and S&P 500 companies will report an impressive 10.8% earnings growth for the full calendar year in 2024.
What is the stock market outlook for 2024? ›
A “steamy” economy should lead to strong profit growth, and healthy earnings will be needed to keep the market rising. Big Money participants forecast a 12% jump in earnings per share for the S&P 500 in 2024, slightly ahead of consensus forecasts for an 11% increase.
At what age should you get out of the stock market? ›
There are no set ages to get into or to get out of the stock market. While older clients may want to reduce their investing risk as they age, this doesn't necessarily mean they should be totally out of the stock market.
Should I pull my money out of the stock market? ›
It can be nerve-wracking to watch your portfolio consistently drop during bear market periods. After all, nobody likes losing money; that goes against the whole purpose of investing. However, pulling your money out of the stock market during down periods can often do more harm than good in the long term.
Will 2024 be a bull or bear market? ›
Economic growth actually accelerated above its 10-year average in 2023. That resilience, coupled with a fascination about artificial intelligence (AI), changed investors' collective mood. The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.
What not to do in a bull market? ›
Mistake 4: Delaying or not making an investment
Last on the list but most common - when the market is at an all-time high in a bull market, most investors stop their SIP or don't make fresh investments. However, this mindset is because you may assume that the market will fall. However, it may not happen.
Investors who want to benefit from a bull market should buy early in order to take advantage of rising prices and sell them when they've reached their peak. Although it is hard to determine when the bottom and peak will take place, most losses will be minimal and are usually temporary.
How long do bull markets typically last? ›
3. How long the average bull market lasts. As much as investors would like the answer to this question to be "forever," bull markets tend to run for just under four years. The average bull market duration, since 1932, is 3.8 years, according to market research firm InvesTech Research.
Should I invest in a bull market? ›
Is a bull market good or bad? A bull market is generally a good thing because it can indicate economic growth and optimism among business and consumers. It may also result in equity growth and higher dividends, depending on the stock and the sector.
What is causing the bull market? ›
There are several things that tend to accompany a bull market. For starters, they generally happen during periods when the economy is strong or strengthening. Bull markets are often accompanied by gross domestic product (GDP) growth and falling unemployment, and companies' profits will be on the rise.
Is a bull market good or bad? ›
Bull markets indicate that the economy is strong and unemployment rates are generally low, which can instill investors with even more confidence and provide people with more income to invest.
Will 2024 be a bull market for crypto? ›
It's 2024. Bitcoin is breaching all-time highs again, memecoins are popular once more and decentralized-finance projects are advertising eye-popping yields. All of this sounds like a bull-market atmosphere — but it might be a while until everyone's feeling the frenzy.
How high will the S&P 500 go in 2024? ›
The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).
Are we in a bull market in March 2024? ›
The positive trends that we have seen in much of 2024 continued in March. This month marks the fifth consecutive month higher for markets. The economy remains resilient despite stubborn inflation, which led the Fed to keep rates unchanged.
