Bull Market Just Completed Year 4. Will It Finish Year 5? Here's What History Says.

Five of the six S&P 500 bull markets that lasted at least four years since 1957 reached year five, and the article argues the current bull market may have further upside. Analysts expect aggregate S&P 500 earnings to grow more than 27% annually over the next five years, while the forward P/E is 19.1—below its five-year average and in line with its 10-year average. Rising interest rates and concentrated reliance on AI-related megacap tech are risks, but the author says earnings growth and potential broader market participation could support continued gains.

Analysis

The key vulnerability is not the age of the advance but the earnings denominator: a benign-looking index multiple depends on ambitious forward profits arriving on schedule. If AI infrastructure spending converts slowly into monetizable demand, depreciation and financing costs can pressure returns before hyperscalers materially cut capex. Their role as both suppliers and customers may support near-term orders, but it does not by itself establish attractive end-customer economics.

Index concentration makes breadth the pivotal signal. Broader participation could cushion a miss from mega-cap technology and extend the advance; it could also reflect rotation rather than fresh aggregate demand, so confirm with earnings revisions and relative performance, not breadth alone. Rising real yields would raise the discount rate and make long-duration growth more vulnerable. The historical episode count cited is too small and selectively defined to time a market turn.

Near term, the article supplies no catalyst for an immediate index short. Over 1–3 months, track real yields, market breadth, and revisions to technology earnings and capex returns. Over 6–18 months, power availability, depreciation, and evidence of AI monetization matter more than announced spending. The contrarian risk is treating analyst growth forecasts as if they were realized earnings: if estimates roll over, a seemingly reasonable forward multiple can re-rate higher even without a sharp rate shock.

Key Decisions for Investors

• Do not add broad S&P 500 downside solely because the bull market is mature; the article does not establish a near-term catalyst. Keep index exposure conditional on earnings revisions and real yields rather than historical duration.
• Watch for a 1–3 month breadth confirmation—sustained relative strength in equal-weight versus cap-weight U.S. equities alongside improving non-tech earnings revisions. If confirmed, consider a beta-aware long RSP / short SPY relative-value position; exit if equal-weight relative performance reverses or breadth fades.
• Treat a sustained rise in real yields combined with downward revisions to large-cap technology earnings or weaker evidence of AI infrastructure returns as a trigger to reduce growth concentration or add index hedges. Falsification: stable or rising revisions and resilient returns on new infrastructure investment despite higher yields.
• Before taking a directional AI-capex trade, verify company-level spending, depreciation, utilization, and monetization data; aggregate index forecasts do not establish which firms will earn adequate returns.