“I’m still standing (yeah, yeah, yeah).”
Elton John’s famous lyric seems particularly fitting as the S&P 500 bull market celebrates its fourth birthday this week.
On Oct. 12, 2022, the S&P 500 closed at 3,577, roughly 25 per cent below its previous peak. Inflation was running at multidecade highs, the Federal Reserve was aggressively raising interest rates, recession forecasts were widespread and investor sentiment was deeply pessimistic.
Yet that October low marked the beginning of a new bull market, generally defined as a sustained rise of at least 20 per cent from a previous market low. Since then, the S&P 500 has climbed more than 118 per cent, excluding dividends, overcoming considerable economic uncertainty and several significant corrections.
But is this bull market beginning to show its age, or could there still be room to run?
Four years old, but not necessarily old
Investors often assume that the longer a bull market lasts, the closer it must be to ending. However, market cycles do not follow a predetermined timetable.
My analysis of Bloomberg data examined 11 completed S&P 500 bull markets dating back to 1949. The average lasted about 5.5 years, although durations varied considerably. The shortest continued for just 21 months, from 2020 to 2022, while the longest persisted for more than 12 years, from 1987 to 2000.
At four years old, the current bull market remains about a year and a half younger than the historical average. Of course, this does not mean another 18 months of gains are assured. Rather, it illustrates why market age alone is a poor indicator of when a bull market might end.
While bull market longevity provides useful historical context, an even more interesting question is how stocks have performed after reaching their fourth anniversary.
What happens in year five?
Of the 11 completed bull markets since 1949, six lasted long enough to complete their fifth year.
Further analysis of Bloomberg data showed that all six generated positive S&P 500 price returns during their fifth year, averaging 17.4 per cent.
Returns ranged from 4.5 per cent during the bull market that began in 1987 to an impressive 30.4 per cent during the fifth year of the advance that started in 1982.
More recently, the bull market that emerged from the global financial crisis gained another 23.3 per cent during its fifth year, eventually continuing until February 2020.
While encouraging, these findings reflect a relatively small sample of bull markets that survived five full years. They provide historical perspective rather than a reliable forecast of future returns. The impressive fifth-year gain following the 1982 market bottom, for example, was followed just two months later by the October 1987 stock market crash.
History offers perspective, not a timetable.
Corrections are part of the journey
Even long-running bull markets rarely advance in a straight line.
Consider 2025, when the S&P 500 declined nearly 19 per cent on a closing basis between February and April, approaching the conventional 20 per cent threshold that defines a bear market.
Yet the broader bull market survived, subsequently recovering and advancing to new highs. Investors who interpreted that correction as the beginning of a prolonged downturn risked missing the recovery.
It serves as an important reminder that market volatility and the end of a bull market are not necessarily the same thing.
Fundamentals matter more than birthdays
Rather than focusing on market age, investors should pay closer attention to corporate earnings, valuations and economic conditions.
Artificial intelligence investment continues to support capital spending across industries, but elevated valuations and high expectations leave less room for disappointment. Broader market participation is also important, as a rally supported by more sectors and companies generally provides a healthier foundation than one dependent on a handful of market leaders.
Meanwhile, rising oil prices could reignite inflationary pressures, complicating monetary policy and keeping bond yields elevated. Ultimately, corporate profitability, valuations, interest rates and investor expectations will determine whether the bull market continues, not how many birthdays it has celebrated.
Investing beyond the birthday
Selling simply because a bull market has lasted longer than expected can be costly. So can assuming recent gains will continue indefinitely.
Four years later, this bull market is still standing. For investors, the priority remains maintaining appropriate diversification, evaluating fundamentals and valuations, and aligning investment decisions with objectives, time horizons and risk tolerance within the context of each client’s broader total wealth plan.
