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

The S&P 500 bull market that began Oct. 12, 2022, has gained about 119% and is approaching its fourth anniversary; all six bull markets since 1957 that reached four years continued beyond that point, though four were eventually followed by bear markets that fell below their fourth-birthday levels. The index is valued at about 26 times trailing earnings, above its 10-year average of 23.6, while its forward multiple is around its 10-year average. The article argues that bull-market age alone is not a reliable sell signal and favors adding to index funds gradually while anticipating eventual declines.

Analysis

The birthday statistic is a weak timing signal: six historical episodes are too few to support a reliable conditional-return estimate, and selecting only bull markets that survived four years introduces survivorship bias. The more useful implication is asymmetric risk, not an imminent reversal. A valuation above its trailing-average multiple can amplify downside if earnings estimates roll over, while the cited forward multiple being near its own average argues against treating valuation alone as a short catalyst. In the next 1–3 months, watch earnings revisions, market breadth and credit spreads; deterioration across those indicators would matter more than the calendar. Over 6–18 months, persistent earnings growth could sustain the index despite a higher-than-average trailing multiple. The contrarian point: the article’s history supports neither “sell at four” nor “buy because every prior bull continued”—eventual losses below the anniversary level show that a longer bull market can still deliver a poor entry-point outcome.

Key Decisions for Investors

• Do not make a directional S&P 500 trade solely on the anniversary or the six-case historical sample. For long-horizon exposure, keep scheduled purchases in a low-cost index vehicle such as VOO or SPY rather than trying to time a top.
• For portfolios with concentrated U.S. equity risk, rebalance to stated risk limits now rather than making an all-or-nothing exit. This reduces exposure to a valuation-driven drawdown without assuming the bull market is over.
• Treat downside hedges as conditional, not a base-case recommendation: consider a defined-risk SPY put spread only if breadth weakens alongside negative earnings revisions or widening credit spreads, and only after checking implied volatility and hedge cost.
• Falsification/watch item: continued positive earnings revisions, broadening participation and stable credit spreads would weaken the hedge case. A sustained deterioration in those measures—or a decisive break below the 200-day average—would strengthen it; verify current data before acting.