Edit ModuleShow Tags

The rise of the super bull (market)

During this latest market correction, it was shocking to see it drop so quickly. Then it suddenly hit me: We’re actually at the beginning of a new super-bull market.

In 14 years, I’ve never been optimistic about the stock markets. It’s been bubble after bubble propelling and distorting prices. Below are my reasons for thinking we’re in a new, long-term bull market.


It was reassuring when we recently approached new Dow Jones Industrial Average highs, made in 2007. Now, we’re in the midst of hitting brand new highs.

Why is that important? For investors in a DJIA index, they’re generating new wealth. We’ve had at least 14 new record closes so far this year. The Dow has rocketed since March, when it reached 14,253. It closed on Aug. 1 at 15,625. New highs equal new wealth.


That simply means a return to normal. From 1999 to 2009, the latest complete decade, an investor in the S&P 500 lost money. The historic “lost decade”.

Typically, the markets average 8-12 percent gains annually. To really get back to normal, the market would have to out-perform to make up for lost time. That would be true “reverting to the mean.”

We’ve seen that, a little bit. For the first half of 2013, the Dow is up 13.78 percent.


Since 1925, the market’s P/E ratio has averaged 15.6. Anything above this could be considered over-valued.

After hitting these new highs, we’re near, and slightly over, this average. Yet that’s not the whole picture. The stock market is considered a leading indicator. So it’s useful to look at the projected price-to-earnings ratio.

According to FactSet.com, “the forward 12-month P/E ratio for the S&P 500 now stands at 14.4.” Well below the average. Lower is cheaper and a sign of a healthy, rather than an exuberant, market.


We’re seeing moderation everywhere. That’s a good sign. Instead of overheating and bubbling over, this market has a solid foundation.

Arguably, there’s a colossal bubble in government debt, although historically speaking, we’re near World War II levels and can work our way out again. Also, the government is collecting more revenue and higher energy production is kicking in.  


What would a super-bull market look like further down the road?

Most of these cycles run for 15-20 years. If we had even 10 years of below-average appreciation the market would be much higher. For example, starting at 15,000, growing for 10 years at 5 percent would ring in at 24,433. That’s low growth.

Higher growth of only 7 percent would get the Dow to 29,507 by the end of 2023.

Edit Module
Ron Phillips

Ron Phillips is an Independent Financial Advisor and a Pueblo, Colorado native. He and his wife are currently raising their two sons in Pueblo. Order a free copy of his book "Investing To Win" by visiting www.RetireIQ.info or leaving a message on his prerecorded voicemail at 924-5070. Simply mention Promo Code #1001 when ordering.

Get more of our current issue | Subscribe to the magazine | Get our Free e-newsletter

Edit ModuleShow Tags

Archive »Related Articles

ARA Newmark sells Colorado Springs asset over list

ARA, a Newmark Company (ARA Newmark), has sold Alturas at Bell Tower, a 60-unit asset located at 1130 Bell Tower Heights in Colorado Springs.

How to be confident under stress – surprising new research

It’s amazing the difference a single word can make when it comes to self-confidence and success.

ColoradoBiz CEO of the Year 2015 finalist: Russ Tomky

Born from an act of Congress in 1916, the 68-employee Farm Credit of Southern Colorado will hit $1 billion in assets by the end of 2015.
Edit ModuleShow Tags

Thanks for contributing to our community-- please keep your comments in good taste and appropriate for our business professional readers.

Add your comment: