We just finished the sixth-best quarter for stocks in 12 years.
The S&P 500 Index was up 10% in the first three months of 2024. And it accomplished that feat with almost no volatility.
That has made investing feel darn easy in recent months. But stocks were up double digits in the last quarter of 2023 as well. And back-to-back quarters of double-digit gains don't happen often.
We're watching a rare scenario unfold. And according to history, not only can we expect double-digit upside from here, but we're likely in the early stages of a major bull market.
Let me explain...
Even the most powerful bull markets see dips along the way. Markets never go straight up.
That's what makes the recent action in stocks so rare. We've seen impressive and consistent gains ever since the bottom in late October.
The S&P 500 was up 11% in the fourth quarter of 2023. And it rallied again with a 10% gain in the subsequent quarter. Check it out...
We've lived through an incredible six months in stocks. The S&P 500 is up about 25% since the October bottom. And we just saw the first consecutive double-digit quarters since 2012.
Looking back, this kind of setup is hard to find. We've only seen 12 other instances since 1928... which comes out to about once every seven and a half years.
The good news is, history paints a clear picture of what happens after these cases – and that's a rising market. Take a look...
Few assets generate wealth like U.S. stocks. Excluding dividends, stocks have led to 6.1% annual gains for nearly a century.
But you can do even better if you buy at the right times. And today's setup is one of those times...
Similar instances led to 3.2% gains in three months, 7.4% gains in six months, and a 12.9% upside over a year. That's more than double what you'd expect to earn in the market on an annual basis.
What's more, these setups tend to flash at the start of major bull markets. We saw signals in 2009... 1986... 1975... 1954... and several in the mid-1930s. Those were all incredible long-term buying opportunities.
Put simply, we've just finished an incredible six months in the markets. But that's no reason to fear that a downturn is just around the corner... It's a reason to be bullish.
The trend is in our favor today. And stocks are moving higher.
It's a bull market, folks. So make sure you're in position to take advantage of it.
Good investing,
Brett Eversole
Further Reading
"The market is flipping from fearful to greedy," Chris Igou writes. A major survey shows few investors are bearish today – but that doesn't mean the upside is over. According to history, similar sentiment levels have been great news for stock prices... Read more here.
"When stocks are going up, they tend to keep going up," Brett writes. Some folks might be skeptical of the market's new all-time highs. But it's smarter not to fight the trend when stocks are rising... Learn more here.
