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Stock investors got the big bull market they wished for — and now they should be careful

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This incredible U.S. bull market will soon celebrate its nine-month birthday. Many exuberant investors are relying on a curious argument to make the case that the bull market has many more birthdays in its future: There have been a few other occasions in U.S. history in which the market rose by as much as it has since the March low, and following some of them the bull market continued a lot longer and rose a lot higher.

Of course, there were other occasions in which, at the comparable point of past bull markets, a bear market was just around the corner. I’ll let you try to guess to which of these occasions the exuberant bulls have chosen to draw parallels.

One of the parallels to which the bulls are drawing is the bull market that began on Mar. 9, 2009, following the Great Financial Crisis. At the nine-month mark of that bull market, in early December of that year, the Dow Jones Industrial Average
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 had gained 60%, rivaling the Dow’s 62% gain this year since the Mar. 23 low. As we all know, the bull market that started in 2009 continued for another decade and rose more than 180% additionally.

No wonder the bulls like that parallel. Far less bullish is another that just as easily could be drawn to the bull market that, according to the calendar maintained by Ned Davis Research, began on Feb. 27, 1933. As you can see from the chart below, at the nine-month point of that bull market it had just 69 more calendar days to live. Six months after that nine-month mark, the Dow was 16% lower.

To be sure, focusing on the 1933 parallel is just as shameless as the bulls’ focus on the bull market that began in 2009. A more systematic analysis needs to focus on all U.S. bull markets, not just those that are handpicked to reinforce a predetermined belief.

To conduct such an analysis, I focused on the 30 bull markets since 1900 in the NDR calendar that lasted at least as long as 2020’s. In the case of most of those bull markets’ initial nine months, the Dow had gained a lot less than it has this year. In each of the four cases in which it rose as much or more as it has this year, the Dow was lower over the subsequent six months.

In fact, according to my PC’s statistical software, there is a significant inverse relationship between the magnitude of the average bull market’s gain over its initial nine months and its gain over the subsequent six months.

With a sample as small as this, however, robust statistical conclusions are elusive. The most sensible thing we can say, based on parallels with past bull markets, is that the current bull market might continue for a very long time and go a lot higher — or it might not.

That’s hardly earth shattering, which is why you haven’t seen any headlines heralding this conclusion. But you should nevertheless keep it in mind as a reality check on the bulls who insist the historical parallels are telling a much more upbeat story.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

More:Stock-market timing expert DeMark ‘confident’ S&P 500 surges 5% in next 2 weeks—then watch out!

Plus: Why Tesla bulls are in the driver’s seat as the stock nears inclusion in the S&P 500



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S.E.C. Commissioner Hester Peirce on the outlook for crypto regulation, and whether this will finally be the year we see a Bitcoin ETF.





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My husband doesn’t get along with my son. I brought most of the wealth into our marriage. How do I split my estate?

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Dear Quentin,

How do couples typically handle their estates in a second marriage? My husband and I have been married for seven years, and it is the second marriage for both of us. I have one adult child from my previous marriage; he has no children.

I brought the majority of our wealth to our marriage, including almost $1 million in my 401(k) and a nice home that is almost paid off; otherwise, we have no debt. My husband and I bought a second home together. We work hard to fund our new 401(k)s, and own a successful business together.

I am turning 65 this year, so estate planning is long overdue. My husband is five years younger than me, and we are both in very good health. We have two issues facing us: I see our retirement as living very comfortably on the monthly income generated by our 401(k)s, pension, Social Security, etc., and leaving whatever may be left to my son.


‘The other issue is that my husband no longer gets along with my dear son at all, and feels no obligation to get along with him.’

I am not interested in scrimping, but I want to be able to have enough money to last us until age 90 (or beyond) by not touching the principal. My husband is more interested in dipping deep into our savings, and living it up in retirement while we are young enough to enjoy it.

The other issue is that my husband no longer gets along with my dear son at all, and feels no obligation to get along with him, to the point that neither one wants anything to do with the other. As far as he is concerned, my son doesn’t meet his expectations, and so deserves nothing from me and certainly nothing from him.

I want my estate planning to be fair to both my new husband and my son. How do people typically handle this type of quandary? I think that I need to create some type of trust to pass on my share of our estate to my son. My pre-marriage assets involved my son as I pursued my graduate degree through night school and worked long hours throughout his childhood.

Second Wife

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

Dear Second Wife,

Don’t allow your husband’s feelings toward your son to influence your estate planning.

Your relationships with your husband and your son and your own plans for retirement are all fair game when making decisions about your estate, but your husband and son’s fractured relationship is their business, not yours. You worked hard for this money, and your son is your legal heir. Any effort by your husband to spend all of your savings and fritter away any inheritance that you intended to leave to your son should be resisted at all costs.

You have worked too hard your entire life to compromise your plans for a comfortable retirement where you have money set aside for long-term medical care insurance, unforeseen emergencies and/or your son. If you jointly own your home, you can leave your half to your son in your will, and specify it can only be sold after your husband passes away.

If you own the home, you can give your husband a life estate. Your son would pay capital-gains tax on the value of your home when he sells it, and not when you bought it. You could also make your son the beneficiary on your life-insurance policy, and/or gift him a certain amount of money per year to see how he manages and spends that money.

Figure out what is fair to yourself first before moving on to what is fair to your husband and your son. It’s OK to put your needs first. I caution against your dipping into savings at a rate that is beyond your own risk tolerance.

Ultimately, you are entitled to leave all other separate property to your son when you die — and, along with a financial adviser, set up a trust with that in mind for you, your husband and your son. Not necessarily in that order.

The Moneyist: ‘I cut his hair because he won’t pay for a haircut’: My multimillionaire husband is 90. I’ve looked after him for 41 years, but he won’t help my son

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.



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These money and investing tips can help you make a place for crypto in your portfolio

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Don’t miss these top money and investing features:

These money and investing stories, popular with MarketWatch readers over the past week, can give you a better understanding of bitcoin and other cyrptocurrency, and help you figure out if digital currency has a place in your portfolio alongside stocks, bonds and other traditional assets.

Sign up here  to get MarketWatch’s best mutual funds and ETF stories emailed to you weekly!



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