One question I’ve had a lot is whether the US bull market has gone on for too long. Some worry that adding new investments now is risky because the market is overdue for a correction. Others who haven’t yet invested in US equities feel like they’ve missed the boat.
But if history teaches us anything, it’s that bull markets can last longer than most expect. The graph below, from Ritholtz Wealth, compares the incredible run-up of the US market from 1982 to 1999 with the current rally that began in 2009 after the global financial crisis. Remarkably, this recent bull market has underperformed the one from the late 20th century.
Here’s another chart. It shows the history of bull (blue shaded) and bear (red shaded) markets over the past 100 years in the US. There’s a lot more blue than red, and looking back, it’s clear that even if there is a bear market on the horizon, our best strategy is to simply hold through it.
It’s natural to feel uneasy after years of strong returns. But just as market downturns are a normal part of investing, so too are extended periods of growth. Innovation is pushing boundaries, interest rates are trending downward, and the US economy remains strong. These factors suggest that we could still see significant upside ahead.
So, if you’re holding back out of fear that it’s too late to invest, it might be worth reconsidering. As the old saying goes: “The best time to invest was 20 years ago; the second best time is today.”
