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Rekenthaler Report

The Stealth Bull Market

The quietest big rally in decades.


The Tree Grew, but Who Was Watching? 
It's been some kind of ride. Since March 2009, U.S. stocks as measured by Morningstar's U.S. Market Index are up 23.9% annualized. For comparison's sake, the Great Bull Market of the '80s, measured from January 1982 through the peak at July 1987, also registered at 23.9% per annum. Yes, the earlier bull market was longer than this one has been (so far); thus, its cumulative returns were greater. But in real terms, the '80s' bull market was actually less roaring than the current version, given the earlier period's higher rate of inflation.

Randall Forsyth touches on some of the effects of this stock explosion in this week’s Barron’s. As Randall points out, the top 1% of Americans controlled 35% of total household wealth and 42% of financial wealth in 2010 (presumably, the last time that these figures were comprehensively collected). Those percentages have certainly increased since then, probably sharply, because all the action has been in the stock market. (Yes, there's been good money in bonds, too, but nowhere near at the level of stocks, plus bondholders tend to be much the same demographic.) Housing prices have gone nowhere since then, and of course there has been little wealth creation through increases in employment and salaries.

John Rekenthaler does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.