Spooky Stocks: Will the Bull Market Survive Another Year?

LPL’s Chief Economist, Jeffrey Roach, discusses the current bull market, its historical context, and the potential impact of recessions.

Last Edited by: LPL Research

Last Updated: October 30, 2024

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Jeffrey Roach:

Hi, I'm Jeffrey Roach, chief economist for LPL Financial, and in this latest edition of the Street View podcast, let's talk about this bull market.

Jeffrey Roach:

Well, two years ago, the bull entered the arena in the final quarter of 2022, as investors started getting convincing reports that inflation was indeed decelerating off that summer peak of that year. And I want to show an important table of returns that provides a bit of historical context on the equity markets. This most recent bull market was a bit unusual. That is year two posted stronger performance unlike the average. But that makes sense when you realize this bull run? Well, it started as the economy continued to skirt a recession. Another point to make is this bull market gained momentum as the Fed pivoted from a rate hiking campaign to the patient, pause, and now easing up on rates. Now let's talk briefly on the length of bull markets. Here I'm showing annualized returns versus the length of a bull run. A few outliers are noteworthy. A bull market started right after the Great Financial Crisis and lasted over 10 years.

Jeffrey Roach:

You can see that on the far right of this chart. The other extreme is the recovery after the government shutdowns of 2020, and that's illustrated on the top left. So where does that leave us today? Well, we are on the higher end of returns, which put some fragility into the system. Remember, bull markets end because of some recessionary shock, whether in the financial system or geopolitical. So speaking of recession, here's a third and final chart for this episode. If an investor asks about the likelihood of this bull reaching his third birthday, your answer has to include something about recessions. And the good news here is stocks have performed well after the Fed starts cutting rates if the economy is not in recession. Well, that's all for now, but please follow us on social media and take care.

 

LPL’s Chief Economist, Jeffrey Roach, discusses the current bull market, its historical context, and the potential impact of recessions.

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