World share markets have gone up too much and it’s a positive that’s turning into a negative!
It’s the worry of what’s coming next that has the investment experts talking of a correction, a pullback, or even a bear market.
Now I don’t doubt one of those alternatives is coming, but so is Christmas, yet share markets are never as consistent and reliable as the date of Christmas.
The only thing consistent about share markets are their randomness.
If you go back to 1980 on the ASX All Ordinaries, there have been seven bear markets and there have been eight bull markets – we’re currently in the eighth.
A bull market is acknowledged with a 20% increase in market value, similarly a bear market is acknowledged with a 20% decrease in market value.
Across the bear markets on the ASX since 1980, the average duration was 249 days with an average decline of 32%.
Across the bull markets, the average duration was 880 days and the average increase was 158%.
As you’ll notice, the bull markets tend to go on longer than the bear markets.
As of July 1 this bull market has been running for 753 days and it’s still only in 5th place against those other seven bull markets since 1980.
The four ahead of it went on for 1791 days, 1317 days, 1172 days and 774 days respectively.
The 1317 day bull market returned 540% before being punctured by the 1987 share market crash, while the 1791 day bull market returned 147% and was hit by the dot-com bubble burst in 2002.
The 1172 day bull market returned 206% before hitting the GFC in 2007, while the 774 day bull market returned 118% before a fallout in the bond market hit equities in 1994.
This current bull market could go on for another 1000 days or it could end tomorrow – only hindsight will be able to correctly tell us the outcome.
And if your investments fit your risk profile, that bear market will be more tolerable.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543, www.mfg.com.au This information is general in nature and readers should seek professional advice specific to their circumstances.
