The Study of bull markets

(click on the table to enlarge)

As many of you know that this blog was born during one of the worst bear markets. Many called for the return of the Great Depression II. I posted a piece of the study of the US bear markets in February 2008@http://turtleinvestor888.blogspot.com/2008/02/study-of-us-bear-markets.html. I was raising a question, in one of my earliest write up, whether the market has more rooms to fall. The market did fall very badly but it was too bad that I fired two shorts too early.

Now it's time that I raise a question based on a study of bull markets. The most common definition of a bull market is + 20% from a low. The current S & P at 979 over qualified to meet this definition but this is not important. The important question is how long can the market run?

Looking at past data, the shortest bull run lasted only 3 months, the longest lasted 10 years. If either one of these is too extreme to you, the middle ground is 3.9 years.

I am no statistician, common sense taught me to look for anomaly so that we can look at the numbers more intelligently. The anomaly of these short bull runs are coming from the Great Depression period. I think the volatilities have got to do with the wrong policies by the authorities.

From the low of March 09, 2009 -- we are already close to about 4.6 months from the low -- so I don't feel like we will get into 3 - 7 months kind of bull run. It got to be longer.

I said earlier that I will see the bears in 2012 -- which I think it is more like 24 - 36 months (from March 2009) kind of bull run. However as I said in one of my posts, the most important factor is depending on whether the authorities are getting too concerns with inflation too early. Click on this link if you want to refresh your memory.

http://turtleinvestor888.blogspot.com/2009/04/learning-from-history-1930s.html

If they are too concerns with inflation too early, then I think there is a high chance that the bull run will be interrupted. However, listening to uncle Ben's recent speech and if he is re-elected, I think he will keep everyone knows that he is not too concerns with inflation yet. I think he understood well of the mistakes of 1937-1938.

NEW YORK (AP) -- Treasurys reversed early losses and moved sharply higher for a second day in a row Tuesday as investors took comfort in remarks from Federal Reserve Chairman Ben Bernanke that inflation will remain low.

In his semiannual address to Congress, Bernanke assured investors and members of the House Financial Services Committee that the central bank will be able to exit its economic stimulus programs and ward off inflation as the economy becomes more stable.

Bernanke said Fed officials expect inflation to be somewhat lower this year than in recent years, and that most expect it to remain subdued over the next two years. Inflation hurts Treasurys because it chips away at the value of their fixed returns over time.

Source: http://finance.yahoo.com/news/Treasurys-jump-as-Bernanke-apf-987840169.html?x=0&.v=6