In November 2014 we published a piece entitled, “Mediocracy and Frustration,” a lament of lame 3.9% annualized returns since the century began for the S&P 500. The historically low returns reflected two monster drawdowns blamed on the tech bubble of 2000 and the financial crisis of 2008 and 65 months of retractions 20% or more from peak.

As if that was not bad enough, every pundit was predicting eminent collapse, including two Nobel Prize winners. A beloved bull, it was a not.

They were wrong. All of them.

The bull lasted six more years delivering healthy returns after all. While still weaker than two previous bulls, from 1980s and 1990s, folks stopped complaining. Ten-year rolling returns recently became quite strong. Along the way, it persevered through various stages of quantitative easing, the taper tantrum, multiple mass shootings, proliferation of ETFs, a surprising presidential election result, BREXIT, the Greece bailout, Brazilian economic downturn, and global trade wars.

One signature characteristic was long periods of low volatility. By several measures, it was the lowest in decades, as described in “Historically Low Volatility.” In 2017, there was a stretch of 12 consecutive months with no drawdown in the S&P 500. None!

Until it all stopped suddenly with the CV-19 crisis, beginning Black Monday March 9. Over the next week, the S&P 500 would fall 10% or more on three different days. The fastest bear ever, based on daily returns, bringing attendant volatility not seen since the Great Depression.

At MFO, we track to month ending levels. And, given a strong bounce, the month ending drawdown from the last peak (in December) was just shy of the formal bear territory threshold at -19.7%. The distinction may be mute. (The Russell 2000, more indicative of breath of hemorrhage, is down 31% month-ending.) So, with a bit of cautious presumption, here’s a graphical presentation of performance for each of the five cycles dating back to the Vietnam War.

The period holds five market cycles, the last now complete, each cycle comprising a bear and bull market, defined as a 20% move down from previous peak or trough, respectively. It is an update of a similar graph presented in the 2014 article.

Similarly, here’s an update of the comparative table, depicting the dramatic differences between the two great bull markets at the end of the last century with the first two of the new century. Note that the excess return (levels above “risk-free”) of the last cycle  were actually quite high.

In retrospect, Bull No. 5 turned out to be quite sweet.

I’d take it back in a New York minute.