This Long-Term Chart Says You Should Still Be Buying Stocks

If market history holds, then the current bull market will be longer than the previous one. Invest accordingly.

green buy button on stock chart screen

Can the market survive a pandemic? It did once before, why not again? Today let’s look at a 106-year stock market chart, dating back to 1915. This is a chart of the Dow Jones Industrial Average in real (after inflation) terms, courtesy of the website

This chart below includes the 1918 Spanish Flu global pandemic and accompanying market crash. The market bottomed in late 1920 and proceeded to embark on a nine-year bull market that saw stocks rise nearly 600% – the Roaring ‘20s indeed.

Market Crash during 1918 Spanish Flu pandemic


Of course, then came Black Tuesday on October 29, 1929, when the party came to a screeching halt and the Great Depression ensued. Stocks lost more than 85% of their value in less than three years, and only managed to recover about half those losses once they finally bounced back in the mid-1930s.

A Pattern Emerges
The next true bull market didn’t start until 1949. That one lasted even longer than the Roaring ‘20s, with stocks mostly rising for 16 years before topping out in December 1965. Again, a bear market emerged, and didn’t stop until the middle of 1982. The next rally – you’ll notice a pattern here – lasted longer than the one before it, going from August 1982 until the height of the Dot-com boom in November 1999, more than 17 years long.

You know what happened next. The bubble burst, stocks came crashing back to Earth for nearly three years, recovered all the losses by late 2007…then fell off a cliff again during the 2008-09 subprime mortgage crisis-fueled recession. The bottom came in March 2009. Stocks have mostly been moving up since then over the past 12 years.

How Long We Have Left in this Rally
As the 100-year stock market chart shows, there have been three major bull runs prior to this one. The first lasted nine years. The second one lasted 16 years. The third one lasted 17 years. Thus, it’s not unreasonable to think we could have another six years left in this rally—which would indeed put us in the mid-to-late innings of this bull market. That’s a tip I heard first from Mike Cintolo, Chief Analyst of Cabot Growth Investor, probably the best at timing the stock market of any investment expert I know. He told listeners in his annual January webinar that we are in the middle innings of the current secular (very long-term) bull market.

That doesn’t mean there won’t be some speed bumps along the way – perhaps (likely?) even this year. There already have been two big ones in the last two-plus years alone: the fourth-quarter 2018 correction (remember that?), when stocks fell nearly 20% in three months; and, of course, the Covid-19 crash last February and March.

Despite those two major pullbacks, which combined shaved about 50% off of share prices in a matter of four or five months, they look more like small blips on the 100-year stock market chart. Market history is dotted with those blips. What matters more is the long-term trend. And right now, that trend is firmly on an upward trajectory.

Do you agree that we are only in the middle of the current bull market? What’s your evidence?


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