The “pickup in volatility is consistent with a maturing bull market,” says Sam Stovall, chief equity strategist at S&P Capital IQ. Stovall’s data show price swings are more dramatic in the early years of bull markets, level out in the middle years, then become wild again in a bull’s later years.
The reason is that early in bulls, investors aren’t sure it’s for real. But as the rally matures, “and the memory of the pain inflicted by the prior bear market recedes, investors become conditioned again to buy the dips, thus triggering fewer 1 per cent days,” he says.
When aging bulls near six, the wild swings return as investors again become wary of down days.
If U.S. stock market gyrations seem more frequent this year, it could be due to the fact that the bull market, which turns 5 on March 9, is getting up in age.
The average bull since 1932 has lasted a little less than four years, says InvesTech Research.
So far in 2014, there have been nine days in which the Standard & Poor’s 500 stock index finished up or down 1 per cent or more, twice as many times as this time a year ago.
The “pickup in volatility is consistent with a maturing bull market,” says Sam Stovall, chief equity strategist at S&P Capital IQ. Stovall’s data show price swings are more dramatic in the early years of bull markets, level out in the middle years, then become wild again in a bull’s later years.
The reason is that early in bulls, investors aren’t sure it’s for real. But as the rally matures, “and the memory of the pain inflicted by the prior bear market recedes, investors become conditioned again to buy the dips, thus triggering fewer 1 per cent days,” he says.
When aging bulls near six, the wild swings return as investors again become wary of down days.
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