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By Noah Solomon
Special to Financial Independence Hub
Yes, I’m stuck in the middle with you
And I’m wondering what it is I should do
It’s so hard to keep this smile from my face
Losing control, yeah, I’m all over the place
Clowns to the left of me, Jokers to the right
Here I am, stuck in the middle with you
- Stuck in the Middle With You, by Stealers Wheel
Caught between the Rock of FOMO and the Fear of FOL
With the current bull market now into its fourth year and many global stock indices at or near record levels, investors could be forgiven for wondering how much upside there can be from here and when the party will end.
While almost nobody with whom I have spoken believes that a bear market is imminent, they are concerned that it is becoming more likely. Despite this increased wariness, people are also cognizant that running for the hills could entail foregoing considerable gains should markets continue their trajectory. They are trapped between the “rock” of FOMO (fear of missing out) and the “hard place” of FOL (fear of losses). Buffett best described this recurring dilemma in his statement:
“The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.”
This month, I discuss whether the current bull market has reached a stage where it is something to be feared. To this end, I will ascertain whether it represents an outlier from a historical perspective with respect to its longevity, magnitude, and valuation. I will also discuss the catalysts that have brought an end to previous bull markets and whether any such “markers” are lurking in the shadows.
It’s not a Question of IF, but WHEN
As the following table illustrates, bear markets have hardly been uncommon.
I have no idea when the next bear market will arrive or how severe it will be. For what it’s worth, I don’t think anybody else does either. However, unless you believe that bear markets have become extinct, markets will continue to suffer periodic episodes of malaise. As the saying goes, “You don’t need to know when something will happen to know that it will.”
Looking for the Signs: Mapping the Present to the Past
From a purely statistical perspective, some measures suggest that the current bull market may have considerable life remaining. However, there are also some signs that have portended the demise of its predecessors.
In terms of length, the current runup in equities does not appear long in the tooth. As of the end of last month [June], it has been 1357 days since the end of 2022’s bear market in mid-October of 2022. By contrast, the average duration of bull markets since WWII has been 1905 days.
With respect to returns, the present bull market appears similarly unalarming, with the S&P 500 Index producing a total return of 123.2%, as compared to an average return of 177.4% for all previous bull markets in the postwar era. However, this average is heavily skewed by the bull run that included the late 1990s tech bubble, during which the index produced a total return of 582.1%. Once this extreme data point is removed, the average bull market return falls from 177.4% to a far more modest 140.6% that makes the current bull market appear considerably less youthful.
From a rate-of-appreciation perspective, the current bull run appears somewhat ahead of itself. In its 1357 days of existence, the S&P 500 Index has delivered a total return of 123.2%, as compared to an average return of 104.8% over the same period during the three previous bull markets. Only the post-global-financial-crisis bull run had a greater rate of ascendance, returning 125.4% over its initial 1357 days. However, when equities troughed in March 2009, the forward P/E ratio of the S&P 500 was approximately 11. Once investors became comfortable that the world was not collapsing, bargain basement prices and hyper-stimulative monetary policies served as rocket fuel for stock prices. In contrast, the current bull run began with a P/E ratio of over 16 and current rates are particularly accommodative, which makes this bull market’s pace of gains appear somewhat anomalous.
Perhaps the most striking feature of the U.S. market is its strength over an extended period. With the exception of the short-lived Covid Crash and the relatively shallow and short bear market of 2022, markets have been on a largely uninterrupted winning streak. Annualized returns over the past 10 years through the end of 2025 are 14.68%, as compared to an average of 10.97% for all rolling 10-year periods in the postwar era. In a worst-case scenario, reversion to the long-term mean would require a 44% decline, while a more benign path would necessitate subpar returns over an extended period.
Lots of Steak. But also, some Sizzle
Don’t get me wrong: if earnings growth had kept pace with stock prices over the past ten years, I would not be particularly concerned that stocks have gotten ahead of themselves. After all, it is widely understood that the S&P 500 Index has become increasingly dominated by a handful of mega cap tech stocks that have delivered phenomenal earnings growth.
Aside from the fact that there is no guarantee that these companies will grow at the same frenetic pace, the fact is that even their past earnings do not explain the broader index’s ascent. Ten years ago, the S&P 500 Index was valued at approximately 18 times next year’s estimated earnings, as compared to 22.4 times today. In other words, nearly 25% of the Index’s gains can be attributed to multiple expansion rather than earnings growth. Put another way, a reversion to the average P/E multiple for the past 20 years of 17.9 would entail a 19% decline in prices.
Bull Markets don’t Die of Old Age: They get Slaughtered
Regardless of whether you think that price gains have been excessive or that valuations are unrealistically demanding, the fact is that these considerations simply don’t matter when it comes to the direction of markets over the near to medium term. The reason for this seemingly flippant comment is straightforward: bull markets don’t die of old age.
Newton’s First Law of Motion states that an object in motion will remain in motion unless acted upon by an outside force. Similarly, bull markets are more likely than not to continue until such a “force” materializes. In other words, bull markets don’t die of old age. Rather, they get slaughtered.
Historically, the most common cause of bear markets has been a toxic brew of high inflation, a Fed hiking cycle, a recession, lower earnings, and a decrease in the multiples that investors are willing to pay for them. Although less common, market euphoria and speculative bubbles such as the tech mania of the late 1990s and the real estate bubble of the mid 2000s have also ended in tears.
Both elements are in play in today’s environment, although perhaps not dangerously so. Inflation has remained stubbornly persistent, refusing to revert to target levels. In response, the European Central Bank, the Bank of Japan, and the Reserve Bank of Australia have all raised rates this year, and U.S. markets have gone from pricing in rate cuts to discounting rate hikes. Moreover, while it is impossible to define the point at which healthy optimism morphs into irrational euphoria, today’s extreme enthusiasm for all things AI warrants close monitoring.
Lastly, elevated levels of deficit spending in the U.S. and many other countries could very well reach a cataclysmic tipping point. Investors may at some point revolt and demand higher yields to adequately compensate them for increased risk. Such an occurrence would open up the very real risk of a vicious cycle in which higher rates make additional borrowing increasingly expensive, thereby creating a self-reinforcing cycle of debt, pessimism, and sluggish growth.
Not necessarily Over the Hill … but past its Prime
I am nearly 100% certain that at some point, something will cause the current bull market to end. The critical question is when!
What I can offer is that bull markets tend to behave in a similar fashion as automobiles: although they can last for a long time, they tend to show wear and tear after the first few years. Historically, bull markets have exhibited stronger performance in the first half of their lives than in the second. The corollary is that although stocks may very well have some gas left in the tank, the current uptrend is likely past its prime. If this 1,357-day bull market lasts another 1,357 days, it is unlikely to deliver the same 123.2% gain. The rock of missing out, although clearly present, has shrunk, while the hard place of losses has grown.
Noah Solomon is Chief Investment Officer for Outcome Metric Asset Management Limited Partnership. From 2008 to 2016, Noah was CEO and CIO of GenFund Management Inc. (formerly Genuity Fund Management), where he designed and managed data-driven, statistically-based equity funds.
Between 2002 and 2008, Noah was a proprietary trader in the equities division of Goldman Sachs, where he deployed the firm’s capital in several quantitatively-driven investment strategies. Prior to joining Goldman, Noah worked at Citibank and Lehman Brothers. Noah holds an MBA from the Wharton School of Business at the University of Pennsylvania, where he graduated as a Palmer Scholar (top 5% of graduating class). He also holds a BA from McGill University (magna cum laude).
Noah is frequently featured in the media including a regular column in the Financial Post and appearances on BNN. This blog originally appeared in the June 2026 Outcome newsletter and is republished on Findependence Hub with permission.
