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High Rising Bull Markets and How They Ended

Right now, we are experiencing the second longest running (and the third highest-rising) bull market in history according to Bloomberg. I find this very interesting, so I decided to look at all of the record-setting high-rising bull markets. They did not end well.

  • The highest rising bull ran from 1990 to 2000.  That market ended in Y2K with a 49 percent drop in the market.
  • We’re in Highest Rising Market #2 right now, so I can’t tell you how it ends, but I suspect it will be much the same as the others.
  • Number 3 ended in 1937. The market went down 55 percent.
  • Number 4 ended in 1956 with a 24 percent drop. It sounds mild compared to the others, but investors still lost close to a fourth of their money.
  • Number 5 ended in 1987 with “Black Monday,” a record-setting drop of 22 percent in one day.
  • Number 6 ended in 1946 with a 30 percent drop.
  • Number 7 ended in 1980 with a 32 percent drop
  • Number 8 ran until 2007. I’m sure you remember how that one ended—with a 57 percent plunge in the market.

What’s the point of this historical research? All bull markets end in bears.  But the highest rising bull markets end in unusually big bears, and the one we’re experiencing right now is the second highest rising bull market in history. We believe we have had 9 years of incredibly artificially low interest rates, and a mountain of debt on top of that. As a country, we are 20 trillion dollars in debt; as a global economy, we’ve amassed 170 trillion dollars in debt. With that kind of debt, artificially low interest rates, and the historical record of big bears after high-rising bulls, I think it’s wise to plan ahead for a big drop in the market.