The S&P 500 received official bull market status on May 9, 2003, when it closed at 933.41, more than 20% above the October 9 close. (Standard & Poor's defines a bull market as an advance of at least 20% from the low set during the prior bear market.) Today the S&P 500 is 75.5% higher than it was on October 9, 2002. Yet this milestone, while certainly positive, raises a few questions. For example, how does this bull market stack up with prior bull markets, and how much longer does this bull have to run?
It should be encouraging to people who constantly worry about investing at the top of a bull market that after one year of a new bull market, an average 86% of the prior bear market's decline is recovered. It may also be surprising to learn that, on average, all of the prior bear market's decline, and then some, is recovered by the second year of the new bull market. The bull markets of 1942, 1974, and 2002, which followed bear market declines of more than 45%, are the exceptions.
-- By Sam Stovall, S&P Chief Investment Strategist
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