If you remember a few months ago, I wrote a piece covering the history of recessions and expansions – one that said the average length of an expansion is 7.6 years. The longest, just prior to the “Tech Wreck” recession, lasted about 10 years.
Since the last recession officially ended in June 2009 — almost eight years ago — history tells us we could be in the last few years of this expansionary bull run in the market.
But whatever you do, don’t go heading for the exits – because if you do, you could miss the next stock market “Super Cycle!”
Here’s why: I analyzed decades of market data to see how stocks perform in the last couple of years before recessions start. The figures are shocking. Every single two-year period before the year a recession started showed positive returns.
I’m not talking about a couple percent worth of gains, either. The AVERAGE rise was 29%. Yes, that’s right — markets typically entered a state of euphoria about 24 months before the onset of recession. Here’s a chart dating back to 1960, which shows how powerful those profits have been:
So where do we stand this time around? I believe the fundamentals still support a bull market. Corporate earnings, consumer sentiment, and economic data are telling us there are more positives for the outlook than there are negatives to be worried about.
There’s nothing to suggest we’re anywhere near a recession occurring, either. If anything, we’re primed for yet another Super Cycle, one supported by more and more investors turning from neutral to bullish, retail investors jumping on board, and strength globally coming back to push equities collectively higher.
Best of all: The bulk of the cycle looks to be ahead, rather than behind us. While the S&P 500 rose 11.7% in 2016, 2015 was a big nothing burger in terms of its paltry 1.4% return.
So given the returns we’ve seen so far with the S&P up 5.5% year-to-date … AND the resiliency of this market … we could be in that Super Cycle of euphoria, one you can’t afford to miss.
My favorite way to play that, of course, is in my Top Stocks Under $10 Service. If you haven’t come on board yet, you can find out more by clicking here.
Mandeep Rai has more than 15 years of investing experience, working as both a stock and credit analyst. At Weiss Ratings, he researches and evaluates financial and economic themes, and makes decisions on when to buy or sell specific shares for the Top Stocks Under $10 portfolio.