How to Talk to Clients Who Fear the End of the Bull Market

Volatility is only an issue for short-term investors. Over the long haul, for disciplined long-term investors, it doesn't matter much because they benefit from long-term averages that make short-term volatility moot.

By historical averages, in terms of duration alone, this bull is by no means long in the tooth. It may be closer to its beginning than its end, based on the market's modern history of short bears and long bulls. 

According to data from First Trust, the average bull market since 1942 has lasted 4.3 years, with an average cumulative total return of 149%, as measured by the S&P 500. The average bear market in this modern period has lasted 11.1 months, with an average cumulative loss of -31.7%. If the current bull is only half done at its current age of 19 months, an implied total lifespan of 38 months would still make it 14 months short of the modern average of 52 months.

Widely respected economists, including Jeremy Siegel and Ed Yardeni, cite various factors likely to drive this bull much longer, beyond 2025. Yardeni sees the rest of this decade as the Roaring 2020s, with strong industrial growth. The digital industrial revolution, which started in the 1990s, continues to be strong today from the AI trade — a juggernaut that's transforming global business, industrial and consumer trends.

Technological advances of course benefit non-tech companies from the efficiencies and enhanced products they enable. And technology has become critical to the functionality of products of many non-tech industrial companies.

Technological advances enable increased economic productivity. That's the secret sauce of the economy that enables strong growth without accompanying increases in inflation. And this in turn will probably enable the Fed to keep interest rates lower for longer, enabling stock market growth, after a cutting cycle expected to start in September. The coming cutting cycle could buoy the stock market for months.

These and other long-term structural factors point to the likelihood of a bull market that may be with us well into 2025 or even longer.

Sure, this bull is mortal. But, as pullbacks and corrections are inevitable, the rebound only underscores a key virtue of this mortality: true resilience. 

Credit: Chris Nicholls/ALM; Adobe Stock

Dave Sheaff Gilreath, CFP, is a founder and chief investment officer of Sheaff Brock Investment Advisors, an investment firm for individual investors, and Innovative Portfolios, an institutional money management firm, both based in Indianapolis. As of June 30, the firms managed assets totaling about $1.4 billion.