Is the bull market supported?

ON AMERICA

Having reached the four-year anniversary of the S&P 500's modern-day low point, we can look back on an extraordinary period of recovery; over those four years, the index has gained about 125%. Little wonder, then, that investors are questioning whether any further gains are possible.

History adds to this sense of unease: if we examine equity performance over the last century, we see that bull markets have generated, on average, gains of 85% and have run for three years. Under such scrutiny, this one appears to be a little long in the tooth. In addition, much has been made of a rotation out of bonds and into equities. We are a little more sceptical as any reversal is likely to happen over a multi-year period. Experience has shown that these movements tend to follow the market rather than lead it. Nevertheless, there is a strong case for optimism. Valuations are cur...