Feast or Famine

Published On: June 6, 2023

Written by: Ben Atwater and Matt Malick

Stock market returns come in fits and starts. Historically, stocks have experienced multi-year periods of robust gains followed by extended stretches of mediocre returns.

Investors often refer to these periods as secular bull and bear markets, but we are not aware of a consensus definition for these secular trends and we typically don’t realize we were in one until long after it has ended.

However, this certainly feels like a secular bear market. After all, the S&P 500 is hovering around levels from the spring of 2021, two years ago.

Prior to the spring of 2021, stocks surged steadily for about two years, gaining over 90%, including dividends. This bull market began with a surprisingly sharp and rapid recovery from the COVID-induced crash in early 2020.

In almost three previous years, from June 2017 through March of 2020, the S&P 500 gained exactly 0%, even including dividends. This was clearly another frustrating stretch for equity investors.

We could continue this exercise ad nauseum throughout the stock market’s history, charting periods of stock market strength followed by periods of lackluster results. Some of these secular periods lasted a few years and others went on for many years.

The pattern is clear. But unfortunately, it’s also unpredictable. Nobody knows when the next bull will arrive. But these unpredictable fits and starts are one reason why equity investors are rewarded with healthy long-term average returns. You get paid to stay patient and endure the lean times.