Third Bull Market Sell off---10/16/2014


My macro research let me know that Secular Bull Market runs last on average 18 years, they appreciate over 1,000%, and they experience 5 pullbacks of 10% or more.  Now, of course, this is just data on the "average" cyclical Bear Markets within longer term Bull Market runs.  So, this isn't a precise road map with how every pullback will function.  I use it to simply give me and understanding of how human beings have reacted to similar circumstances in the past.

Having said that, I'm counting this sell off as our 3rd cyclical Bear Market within our longer-term Bull Market.  The S&P 500 has dropped 9.85% from its peak to its trough, so far.  I am not saying that it is over, but, regardless, we've passed a mile stone in our current Bull Market run.  

I've written a lot about market cycles.  The one I wrote in February of 2009, entitled "The Beginning of the Bull" and its follow-up in March, highlighted how all of my macro indicators were flashing signs for the start of a Secular Bull Market.  So far, we are about 6 years deep into that market and the S&P has appreciated about 200%.  Now we've had, or are having, our 3rd major pullback within the longer term trend.

I find that knowing how markets have behaved in the past gives context to what is happening in our contemporary markets.  This helps me mentally and emotionally deal with the environment and aids me in the decision making process.  I thought it might help you all in similar ways, hence the note.