The Bull Market Will Last Another Decade: Fundstrat

Worried that the stock market is overbought, overpriced and thus headed for a nasty fall sometime soon? If you sell out now, you may be leaving additional gains of 400% or more on the table, according to Tom Lee, the widely followed market strategist at Fundstrat Global Advisors, in remarks on CNBC.  "It's more like 2029 is the peak of this equity market cycle and then the S&P is 6,000 to 15,000," Lee told CNBC.

From its previous bear market low reached in intraday trading on March 6, 2009, the S&P 500 Index (SPX) has advanced 326% through the close on January 25, 2018. Lee's bold forecast, made in consultation with his colleague Rob Sluymer, a technical analyst at Fundstrat, implies further gains of between 111% and 428% from today through 2029. Nearer term, Lee projects a closing value of 3,025 on the S&P 500 for 2018, up 6.5% from the January 25 close.

Fundamental Drivers

Lee believes that the global business cycle is only at its midpoint, and thus the current economic expansion has more years to run. Among the indicators that he follows closely, per CNBC, are auto sales and housing starts. He also expects investors to shift funds from bonds to stocks, in search of better returns, thus giving a further impetus to stock prices.

Meanwhile, panelists in Barron's annual investment outlook roundtable also see strong worldwide economic fundamentals, with no hints of a recession in sight. They also find that technological advances are giving a secular noninflationary boost to economic output worldwide, and that tax reform in the U.S. should boost both the economy and stock prices. (For more, see also: 5 Reasons the Bull Market Will Thrive in 2018.)

Ari Wald, the head of technical analysis at Oppenheimer & Co., says that stocks might rise as much as 130% over the next year. He notes that the market is registering highly overbought conditions, but his analysis of history indicates that about another year of robust gains is likely to follow. Meanwhile, Stephen Suttmeier, chief equity technical analyst at Bank of America Merrill Lynch, sees a breakout to the upside of a "big money indicator." (For more, see also: Why 'Overbought' Market Can Rise 130%: Oppenheimer.)

Grim Anniversary

Rather inauspiciously, 2029 will be the 100th anniversary of the most storied market crash in world history. The Great Crash of 1929 sent stock prices plummeting by 89%, was a factor in creating the worst economic calamity in U.S. history, the Great Depression of the 1930s, and full recovery of stock prices took more than 25 years. (For more, see also: Why The 1929 Stock Market Crash Could Happen in 2018.)

Unprecedented Length

If Lee is right, and the current bull market does last into March 9, 2029, that would be 20 years from the generally recognized end of the previous bear market on March 9, 2009, or a period of 7,305 calendar days. This would far surpass the three most recent bull markets in the S&P 500, which lasted, respectively, 1,839 days (1982–87), 4,494 days (1987–2000), and 1,826 days (2002–07), per Yardeni Research Inc. Only two other bull markets since 1928 lasted more than 2,000 days, per Yardeni: 2,954 days (1949–57) and 2,248 (1974–80).

Using a slightly different methodology, First Trust Portfolios LP developed its own timeline of bull and bear markets since 1926. Their analysis results in fewer, but generally longer, bull market periods than Yardeni reports. The longest post-1926 bull market per First Trust lasted 15.1 years, or more than 5,500 days, from the late 1940s through the early 1960s. The current bull market has reached 3,244 days.