The longest bull market started from 12/4/1987 and ended at 3/24/2000, 4494 days in total. I would liket to know what’s the macro economic reason behind it? I am thinking about the tech booming inpact. But any other key factors? How can I use fundamentals to explain this “outlier”?
how do you define a start and end of a bull market? those are pretty exact dates
The bull market actually started in 1982, right after the double dip recession. A total of 18 years.
When you’re talking about a 20 year period of time, it’s very difficult to isolate a single variable. Also, what starts a boom is often not the same as what ends it. What tends to happen is that whatever starts the boom tends to fade as its impact exhausts, and then something else starts to become influential and changes the dynamic.
It also depends on what “the boom” means: whether you mean the equity market or the economy. The two are related, but the timing isn’t the same. For example, the stock market boom does seem to end around 2000, but the economy continued more-or-less until 2007. The dot-com bubble was primarily a valuation problem in tech stock prices, but the financial crisis fed back and paralyzed much the economy, and in many ways we still haven’t recovered (though stock prices have).
Both the market and the economy boomed in the early 1980s. This probably had something to do with it:
Volker basically jacked up interest rates in 1980 to break inflation. As that happened, interest rates started to fall, and it continued as people begain to believe that inflation would not return. From there, there was a loong way for interest rates to fall to get to more historically normal levels. But why stop there, Greenspan kept pushing rates lower, and no one really felt it was in their interest to stop him, even if they could.
The value of prety much everything starts to float upwards when the risk-free rate on capital drops, and it did this for about 35 years. That’s a pretty strong tailwind. Even when there are bumps and business cycles, such as 1990 recession, being able to borrow at progressively lower rates helps smooth everything out.
In the 1980s, breaking inflation in the US and deregulating and breaking the unions basically made a better environment for business.
In the early 1990s, the end of the cold war, increased globalization, decline of global trade barriers, and outsourcing pushed up corporate profits. In the late 1990s, the tech boom kicked in and accelerated these trends, more offshoring, etc. Valuations got extreme after about 1998 and became untenable in march 2000. The equity bubble looked like it might remain restricted to the tech sector and the ensuing recession relatively light until Sept 11, 2001 when the world just changed, people started to fear travel, we started fighting wars, etc… The housing boom continued for a few more years and softened the blow, but it came back to hit us in 2008-9.
So that’s the brief version.
There’s also the expansion of debt, which basically started in 1982. I’ll see if I can find the chart of total US public and private indebtedness over time. The first time I saw that chart, I remember thinking "Woah, I had been thinking that GDP growth was a result of productivity improvements, but a substantial part of it is simply a result of purchasing more stuff with ever increasing debt.
Which of course was facilitated by what’s shown in the chart above.
(EDIT, here is a total debt chart I found. This debt is shown as a % of GDP - it’s actually even more stunning when you see it as a total figure (inflation adjusted or not), because GDP is also growing at the same time; also, most of that debt is private debt, not government debt. I’ve seen charts that separate out the two components and the increase in government debt - even as a proportion - is peanuts compared to the increase in private debt.)