There is a lot of talk on the net, in the WSJ, etc. about how we're in the longest bull market in recent memory, that "this can't last forever", and so on. Does history suggest that when things finally do turn south, it will be more severe due to the length and scale of the bull market we're in? Or is there no useful, known correlation between the size of a bull market and the proceeding downturn?

  • Probably better suited for economics.stackexchange.com – Hart CO Sep 30 '18 at 16:09
  • @HartCO - I'm not on your level (judging by your answers I've read on here). My amateur assumption is that the bull market is more than simply a recovery and reaction to the 2008 downturn, based largely on charts of the big indexes. They've picked up (in terms of value and rate both) so much over the past 10 years that they dwarf what they've been in the past. For what I'm talking about, go to google and enter 'djia' and select 'max' for scale. Again, I'm a newb and this is likely an illogical observation. – horse hair Sep 30 '18 at 16:10
  • @HartCO I put it here because the question relates to my investing decisions. I don't care too much about the theory behind it. Also that we have an "economics" tag here suggests that some amount of economics is allowed in questions. – horse hair Sep 30 '18 at 16:12
  • I don't think that there's any correlation between the length of a bull market and the severity of an ensuing downturn. The 1982-1990 and 1991-2000 bull were long in duration and the end of them was a small blip compared to previous gains. Conversely, the recession of 1974 was far more severe than the run up.Google "Macrotrends DJIA Historical" and you can view a graph of up to 100 years of the DJIA with recessions overlaid as well. If you want a more precise answer, download the data and calculate market gains and losses for bull markets and their subsequent downturms. – Bob Baerker Sep 30 '18 at 17:51
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    @horsehair Agreed that it's relevant for personal investing and therefore not entirely off-topic, but I think any answers will be more economic theory than practical investing wisdom. I would guess there's no correlation that is actionable, we'd all love to time the market, but successfully doing so is more luck than skill in most cases at least, I'd think. – Hart CO Sep 30 '18 at 23:41

Based on A Random Walk Down Wall Street - no. The book's main premise is the market goes up and down randomly, and there is no way to predict future performance based on either historical Data or detailed analysis of the company (Warren Buffet comes up a few times).

Essentially, there is no way for traders to know which companies are embezzling money, about to be hit with tariffs, etc. Because the future is unknown its impossible to predict bull/bear markets as they are caused by future events.

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