History can tell us a lot about the future of a market.
It's no secret that we are in a new bull market. Investors are enjoying the surge in stock prices. S&P 500 (^GSPC 0.12%) It's up more than 46% from its lowest point in late 2022.
But more than a year and a half into this bull market, some investors may be wondering how long it will last. There's no magic crystal ball to look into the future and know exactly how long until the next recession, but looking at historical data can be helpful.
To be clear, past performance is not a predictor of future returns. Just because there was a clear trend during past bull markets doesn't mean we'll see the same trend now. But a look at history gives us a rough estimate of how long this bull market is likely to last.
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Bull markets last longer than you think
There is good news regarding the average period of market declines and rises. On average, bull markets last much longer than bear markets.
The average S&P 500 bull market since 1929 lasted 1,011 days, or just under three years, according to data from investment group Bespoke. There were also some outliers, such as the bull market from 1987 to 2000 (which lasted a whopping 4,494 days) and from 2009 to 2020 (3,999 days). There were also five separate bull markets that lasted less than 100 days each, most of which took place throughout his 1930s.
The median length of the bull market was about 522 days, or about a year and a half. While that may be concerning, given that the current bull market is about 19 months old, this doesn't necessarily mean a recession is just around the corner.
^SPX data by YCharts.
Of the last 10 S&P 500 bull markets since 1970, half have lasted at least 1,000 days. All but two lasted longer than the median of 522 days. Bull markets seem to be lasting longer as time goes on, at least in part due to the fact that economists and regulators are much better at preventing deep recessions and recessions than they were a century ago. is.
On the other hand, bear markets are generally much shorter than bull markets. The average duration of a bear market is just 286 days, and the median duration of a bear market is 240 days, according to Bespoke data.
How to prepare for a potential bear market
Again, there is no way to know for sure whether another recession is on the horizon. However, the market cannot continue to soar forever, so at some point we will face a bear market. No matter when it happens, you can start preparing now.
The best way to survive a recession is to invest in stocks of healthy companies and hold them for the long term. Even if stock prices plummet, you theoretically won't lose any money unless you sell your investments. Blue chip stocks are more likely to recover from downturns, so you have a better chance of surviving unscathed by simply holding onto your investment until the market inevitably recovers.
Now is also the time to reassess whether all the stocks in your portfolio deserve to be there. If you currently own a stock that isn't performing very well, now may be the best time to sell while the stock price is still high.
No one can say exactly how long the current bull market will last, but if history has shown us anything, it's that good times generally last much longer than recessions. By investing in the right places and maintaining a long-term outlook, you can rest easy knowing your portfolio is as protected as possible.
Katie Brockman has no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.
