Thread by @jsmian

1) Since the Second World War, there have been three secular bull cycles with numerous cyclical trends occurring in between.

Thinking through them, we can guess what might be coming next. 🤔
stray-reflections.com/article/145/On…

2) The first was from 1950 to 1968.

The S&P 500 rose from 20 to 109 for a gain of 440 percent.

But twelve years into the secular bull market, there was a violent correction.

3) In 1961, stocks had risen 27 percent, with leading technology stocks like Texas Instruments and Polaroid trading at up to 115 times earnings.

And then, stocks “broke,” as The Wall Street Journal described it, seemingly out of the blue.

4) On May 28, 1962, the S&P 500 plunged 6.7 percent.

The flash crash left traders shaken and exhausted.

It was the worst decline since 1929.

5) The S&P 500 fell about 30 percent in six months. IBM fell from $607 to $355. 

On June 19, the New York Herald Tribune wrote: “The experts have been confounded and there’s not an unshattered crystal ball left in Washington.”

6) Investors bombarded the White House with complaints and pleas for help.

Households slashed their purchases of stocks while 8 percent of stockbrokers left the business in 1962.

7) Oil tycoon J.P. Getty addressed the press, “When some folks see others selling, they automatically follow suit. I do the reverse—and buy. I don’t think the slide will go on.”

8) With the backing of successful investors, the public’s fears subsided.

The stock market bottomed on June 25 and recovered its prior peak fourteen months later.

The S&P 500 doubled over the next six years.

9) The next secular bull market took place from 1982 to 2000.

The S&P 500 rose from 120 to 1,500 for a gain of 1,150 percent. 

The crash of 1987 occurred five years in, the largest one-day percentage drop in US stock market history.

10) On October 19, the stock market plunged over 20 percent under a selling avalanche of more than half a billion shares that would have normally taken a year of trading to reach. 

Paul Tudor Jones, who profited on the day, said Wall Street was dealt a “life-threatening blow.”

11) Many thought the crash was the start of another depression, including Jones who founded Robin Hood Foundation because of his concern for the poor.

12) But prices rebounded the next day, and by the end of 1987 the stock market was higher than it had been at the start of the year

13) Contrary to popular perceptions, the S&P 500 returned to its pre-Black Monday level just two years after the crash.

It went on to rally for another thirteen years.

14) The third secular bull market in the postwar era began in 2013.

Stocks convincingly broke out to new all-time highs after the worst calendar decade for history in stocks (2000-2010).

The S&P 500 has risen from 1,500 to 3,800 so far, for a gain of 150 percent.

15) This time the crash happened seven years in.

The S&P 500 fell 12 percent on March 16, the second-biggest one-day fall in history.

The VIX index blew out to 83.

Less than 4 percent of stocks were trading above their 200-day moving average.

16) By March 23, the S&P 500 was down 35 percent from its peak.

This was the fastest bear market ever.

stray-reflections.com/article/34/Req…

17) Second quarter GDP plunged 32.9 percent, the worst ever, and unemployment rose to the highest level since the Great Depression.

18) But then, contrary to everyone’s thinking, the stock market erased all of its losses over the next 45 days.

No one believed that stocks may have just entered a new bull market.

stray-reflections.com/article/98/Ing…

19) What if 2020 is an intervening cyclical top within a contrasting secular uptrend, like in 1962 and 1987?

Have you thought about that?

20) We think the bull market has years to run.

The path is likely to be messier and confusing, but the S&P 500 could easily rally to 5,000. 

Onwards and upwards.
stray-reflections.com/article/145/On…