History Says Every S&P 500 Bull Market That Reached Its 4th Birthday Kept Going

The S&P 500 bull market, which began at 3,577.03 on Oct. 12, 2022, is approaching its fourth anniversary after gaining about 119% and reaching a record 7,818.93 on Oct. 6. All six S&P 500 bull markets since 1957 that reached age four continued beyond it, but four were eventually followed by bear markets that took the index below its fourth-birthday level. The index trades at about 26 times trailing earnings versus a 10-year average of 23.6 times; the article argues bull-market age alone is not a useful timing signal and favors regular, incremental investing.

Analysis

The birthday statistic has little signal value: it conditions on bull markets that already survived four years, then mixes very different macro and valuation regimes. Treating it as a timing indicator risks selling a trend without identifying a catalyst. The more relevant mechanism is valuation sensitivity to earnings: a trailing-multiple premium alongside a forward multiple near its norm leaves the market exposed if earnings estimates roll over, while stable or rising estimates can absorb elevated trailing valuations. Thus the key near-term monitor is estimate breadth and revisions, not the calendar.

Over days, a milestone itself is unlikely to create durable flows; a sharp reaction would more plausibly reflect positioning or a concurrent macro surprise. Over 1–3 months, real yields, earnings revisions, and market breadth can determine whether the premium compresses or is justified. Over 6–18 months, a downturn could still take the index below today’s level even if the expansion continues first; historical longevity offers no protection against drawdown depth.

Contrarian point: the sample is too small and selected to support either a bullish continuation or bearish reversal call. The article’s valuation comparison is also mixed, not an independent sell signal. No tactical short is warranted from these facts alone; downside protection should be priced against current implied volatility and portfolio exposure.

Key Decisions for Investors

• Do not alter strategic S&P 500 exposure solely because of the anniversary. For planned allocations, stage purchases over time rather than making a one-day all-in timing bet.
• For portfolios with a hard drawdown budget, evaluate a 3–6 month SPY put spread sized to the exposure being hedged; check implied volatility, skew, and hedge cost first. Treat premium paid as the defined risk, and avoid buying protection if pricing makes the carry unattractive.
• Watch 1–3 month earnings-revision breadth, real yields, and index breadth. A sustained deterioration in revisions alongside rising real yields would strengthen the case to reduce beta; resilient revisions and broad participation would weaken it.
• Falsification: if forward earnings estimates continue to rise and breadth improves, a valuation-driven bearish thesis is weakened. Conversely, broad estimate cuts or a decisive deterioration in breadth would invalidate the assumption that the valuation premium can be absorbed by earnings.