Investing in a Secular Bull and Bear Market

 1999 definitely felt like the end of a secular bull market as the world feverishly prepared for impending doom of Y2K. The secular bear market that followed would see the tech bubble and a housing crisis wreak havoc on investment accounts everywhere and take nearly a decade for many portfolios to fully recover.  

 These were all cyclical market events playing out within a secular bear market.  

 According to Investopedia, “A secular market is driven by forces that cause the price of investments or an asset class to rise or fall over a long period. A cyclical market is shorter in duration than a secular market and often occurs during seasonal or cyclical business trends.” 

 Many experts agree, the last secular bear market started in 2000 and ended in 2013 (wthers say it ended in 2009) –which brought in the current secular bull market we are in. Here’s how the team at CFI defines a secular bull market: 

 “In secular bull markets, the prices of equities are likely to increase more than decline, and commonly, any short-term decreases in the prices are compensated for by the general growth in the prices over time.” 

 Although, if you agree with this article Lance Robert wrote for Seeking Alpha, we could be entering our fourth secular bear market. Here’s his take on a secular bear and bull market:  

 “In a “secular bear,” the market tends to trend sideways with severe drawdowns and sharp rallies. Three items drive secular bull markets: 1) valuation expansion, 2) earnings growth, and 3) falling interest rates.” 

 An article that Berry Ritholtz wrote has this chart he got from Stephen Suttmeier of Bank America Merrill that breaks down the length and returns of the S&P during different secular bull and bear markets, going all the way back to the 1930s.