The S&P 500 Index is closing in on another year of gains exceeding 20%, leaving many analysts grappling with concerns about “frothy valuations.” However, a recent blog post from Carson Research boldly declares, “We are in a bull market, and it’s alive and well.” This confident assertion is fueled by a compelling set of data and shifting expert opinions.
Carson Research points to a wave of apologies from previously bearish analysts, highlighting a significant change in market sentiment. Ryan Detrick, the firm’s chief market strategist, notes that 2024 is on track to be the best election year return ever, with the S&P 500 achieving 56 new all-time highs. This current bull market, nearing 26 months old, has surged over 70% from its mid-October 2022 lows. Detrick’s optimism stems from historical precedent: “Once previous bull markets reached this stage, there were many more years of gains left.” He supports this claim with data showing five bull markets over the past 50 years that lasted at least as long; the shortest of these extended for five years, with others lasting significantly longer – 6.2 years, 12.3 years, and even a few that stretched for five full years each. He uses the analogy of a cruise ship, highlighting that once the market gains momentum, it can be difficult to halt.
The evidence extends beyond the S&P 500. The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) have enjoyed impressive year-to-date gains of 27.54% and 29.31%, respectively. The iShares Russell 2000 ETF (IWM), tracking the Russell 2000 Index, is also up 18.63%. The Dow Jones Industrial Average reached a record eight 1,000-point milestones this year, and November saw a remarkable surge in small-cap stocks, with the Russell 2000 climbing 10.9%. Carson Research’s analysis reveals that out of 22 similar instances of double-digit monthly gains in the Russell 2000, the index was higher six months later in 90% of those cases, and up an average of 15% a year later.
This shift in sentiment is not just limited to Carson Research. Prominent analyst David Rosenberg of Rosenberg Research has publicly reversed his bearish stance, issuing an apology for his previous predictions. In a piece titled “Lament of a Bear,” Rosenberg admits to overemphasizing valuation concerns and negative sentiment indicators. He concludes that he will now focus on interpreting market signals, acknowledging the market’s ability to defy expectations but emphasizing its overall intelligence and long-term trends.
In conclusion, while concerns about market valuations remain, the compelling data and significant shifts in expert opinions suggest a continued bullish trend, potentially extending for several more years. The ongoing strength of various market indices, coupled with historical precedents, paints a picture of sustained growth and long-term opportunity for investors. This data showcases the incredible power and resilience of the current bull market, suggesting a promising outlook for those who stay invested.
