1,000 Days and Counting: How Long Can the Bull Market Last?

Dow Jones Passes 17,000 For The First Time
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One thousand days and counting.

That's how long it's been since the Standard & Poor's 500 index (^GPSC) suffered a correction. That means the S&P 500 hasn't suffered a 10 percent drop from its recent high level mark since October of 2011.

What does that mean for investors? Should they take their profits now, or does this long-running bull market have more room to maneuver?

One thousand days is a long time for the bull market to run without interruption, but it's not unprecedented, and it doesn't necessarily mean another correction is right around the corner. The bull market of the 1990s ran for 2,553 days without a correction.

"When the market does something unusual it is a good idea to be on your guard," said Hugh Johnson, chairman of the Albany, New York-based money management firm Hugh Johnson Advisors.

"For the market to have performed as well as it has without a significant correction is pretty unusual," said Johnson, "but I'm not doing anything about it."

Most analysts say the 1,000 day mark isn't significant in their fundamental analysis of the market, but they acknowledge that it is psychologically important for investors.

The current streak is double the average span without a 10 percent pullback. About one year after the current bull market began in 2009, there was 16 percent correction in 2010. The most recent correction came in 2011, when the market slumped by a steep 19.9 percent, and there was a close call in 2012 when it fell 9.9 percent.

According the Stock Trader's Almanac, the average bull market includes two periods of correction, so the current rally isn't unusual in that regard.

Many market pros and anxious investors have been anticipating another correction for quite some time, but the market has continued to plow ahead, setting record after record. So far this year, the S&P 500 has rung up 25 record highs, the latest one coming on Thursday. It went into the 3-day weekend just shy of the unprecedented 2,000 level. In addition, the Dow Jones industrial average (^DJI) topped the 17,000 mark for the first time.

That means if you invested in an S&P index fund back when the current bull run began in March of 2009 -- and not traded in and out of that position -- you would have nearly tripled your investment. But Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, says the current bull "gets no respect."

The financial media -- in print and on TV -- is filled with gloom and doom forecasts. A recent Wall Street Journal headline proclaimed "Some See Clouds Forming," while some market prognosticators warn that a market collapse is just around the corner.

They contend the market cycle has run its course, that the market is way overvalued when you examine corporate profits and other key measures, and that unrest in the Middle East, Ukraine and other hot spots could explode.

But most forecasters say that unless there is a major economic crisis (which seems very unlikely after the recent string of upbeat economic data) or a geo-political catastrophe, then the current bull market is likely to continue into next year.

Jeffrey Hirsch, editor of the Stock Trader's Almanac, studies historical trends in the market. He expects stocks to trade sideways or retreat a bit during the usual "summer doldrums" of July and August, and then resume their advance later this year and into next year. "I don't see the market rolling over until 2016," said Hirsch, noting that presidential election years "tend to be horrible."

Johnson, the veteran money manager who has helped guide investors through many bull and bear market cycles, says he is "on guard" but not worried at this point. He says the market hasn't been overrun by widespread optimism. "You don't run for cover, but you can build some defenses into your portfolio." If you're worried about a downturn, he says you can sell economically sensitive stocks like housing, and buy safer issues like utilities and household product stocks.

Many analysts even say a market correction, which is inevitable at some point, is healthy for the long term bull to continue. It gets stocks from levels that are seen as slightly overvalued back into a more fairly priced range. And as Johnson notes, that would provide for "more upside potential with better buying opportunities."

The 7 Best Things to Buy in July
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1,000 Days and Counting: How Long Can the Bull Market Last?
It's time to hit the thrift stores, consignment shops and furniture outlets. Now that most people have done their spring cleaning and renovating, their used furniture is on the market. That means a hefty supply, plus low prices since stores only have so much space. You can also find discounted new furniture in July, because the next year's models arrive in stores in early August. Don't be afraid to try to negotiate on prices. It often works.
Electronics -- computers and tablets specifically -- see decreases in price starting in early July. These prices continue to drop as the school year gets closer, and best way to stay on top of the hottest deals is to sign up for e-newsletters from retailers. Remember to take advantage of company and educational discounts that may be available to you, and to negotiate for free or discounted accessories.
Bottled water goes on sale throughout July as a lure to get you into stores. it also gets purchased more frequently throughout the summer -- the natural result of barbecue and picnic season, when people entertain and spend more time outdoors. So if you drink bottled water year-round, stock up now.
If you can manage, hold off purchasing your new grill until after the Fourth of July, when mark-downs approach 50 percent off. This applies to grilling accessories, too, including grill baskets and utensils. Also, check consignment shops and thrift stores. Many people buy new grills for the Fourth of July and donate or sell their old ones.
Speaking of grilling, among the hottest buys during July are condiments for burgers and hot dogs: mustard, ketchup, relish, sour cream, sauerkraut, mayonnaise and pickles, etc. Buy in bulk, and pair in-store specials with coupons for super-low prices on these summer must-haves.
If you're in the market for a sweet new pair of jeans, July is the best time to buy them. Few people buy jeans during one of the hottest months of the year, so retailers put them on sale to move them. Stores also get new jeans in the late summer in anticipation of fall shopping season, so they're eager to sell old ones to make room for new duds.
Formal suits are also seldom purchased during the middle of summer. Consequently, many suit retailers will hold sales to keep business moving. If you have an upcoming formal wedding to attend -- or if you simply need new suits for work and special occasions -- July is the best time to buy.
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