November 2021 IssueLong scroll reading

Super Bull Markets and Latest Upgrades To MFO Premium

By Charles Boccadoro

Last month, in “A Leap of Faith – MICUS Chicago 2021,” we noted that Morningstar’s CEO Kunal Kapoor recently described US equities as “one of the greatest bull markets.” The statement looks past March 2020, of course. Similarly, many who discuss the great bull markets of the 1980s and 1990s, don’t acknowledge the sudden decline of October 1987, so-called “Black Monday.”

Basically, both retractions were so short, each just three months, they just get lumped in with the long-term gains of the adjacent bull markets, ex post, of course. 

We last discussed the six market cycles US equities have experienced since 1968 (or nine since 1926) in “A Thirty Year Proposition,” published September 2020. Here’s an update of its key cycle table through September 2021:

You can see the shortness of the bear markets of 1987 and 2020. In response, we’ve added two new evaluation periods to MultiSearch, our main search tool on MFO Premium. The new periods are nicknamed “Super Bull 1 & 2.” 

The first Super Bull, which began in late 1974, returned 17.2% annualized for the S&P 500 across 26 years. 26 years! The second, which began early 2009, has returned about the same at 17.4% annualized across these past 13 years. It’s still going.

The Tech Bubble finally took down the first Super Bull in 2000. Survivors of that bubble (Amazon, Apple, Microsoft) have helped propel the current Super Bull. One reason the current bull market may be “one of the greatest” … its excess return (over risk-free) is 17.0% annualized versus “just” 10.3% for the previous one.

In addition to these two new periods, we recently added several new features that derived from an enjoyable Zoom session with premium subscriber Devesh Shah. The former Goldman Sachs partner resides in New York and publishes the YouTube Channel Understanding Personal Finance. He also happens to be a co-inventor of the stock market’s barometer of fear, the Cboe’s Volatility Index (VIX). His most recent interview (“Video 81”) is outstanding.

Thanks to his suggestions, the MultiSearch now includes:

  • Decadal Returns, Ratings, and Display Periods. Both absolute (calendar decade) and relative (10-year periods, stepping back from today). Most screeners available today provide risk and performance metrics on past 10 years. But how did the funds you’re considering perform in the previous decade? Now, it’s easy to find out.
  • After Tax Returns and Ratings. With help from Tom Roseen, Refinitiv’s Head of Research Services, we’ve derived these after-tax metrics for 1, 3, 5, and 10-year periods, both pre-liquidation and post-liquidation, from the Tax Cost Ratio (TCR), which we introduced last July. You will find these new screenable metrics in the Purchase & Taxes group, along with TCRs and TCR Ratings. Devesh believes taxes can “erode out almost any long term competitive outperformance of actively mutual funds.”
  • Adjustable Columns. Thanks to a recent development by Allan Jardine of SpryMedia and associate Daniel Hobi, users can now adjust the width of any column in the results table. Just place the cursor between column headers and pull left or right. (To incorporate this cool addition, we had to alter the table appearance a bit.)

The table below illustrates the new calendar decade period metrics for three indexes (SP500, LGovBnd, and TBill), along with the equity/long bond allocation indices from the Allocation Pre-set Screen. All date back to 1926. The table reveals that rarely in the past 100 years have excess returns been as high as those since 2009, the start of the current Super Bull.

Hope you will enjoy the new features!

Refinitiv will drop the month-ending October data Saturday, 6 November. Ratings should post the next day.

PS. We just went live (Thursday, 4 November) with month ending October ratings. Going forward, we should now be able to post month ending ratings within 2-3 days of month close, thanks to Refinitiv including latest month ending data in their daily drop.

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About Charles Boccadoro

Charles Boccadoro, BS (MIT), Post Graduate Diploma (von Karman Institute, BELGIUM). Associate editor, data wizard. Described by Popular Science as “enthusiastic, voluble and nattily-dressed,” Charles describes himself as “a recently retired aerospace engineer.” He doesn’t brag about a 30 year career that included managing Northrop Grumman’s Quiet Supersonic Platform and Future Strike Systems projects, working with NASA and receiving a host of industry accolades. Charles is renowned for thoughtful, data-rich analyses and is the driving force behind the Observer’s fund ratings and fund screeners.