The stock market has long operated in cycles—alternating between prolonged downturns and sustained periods of growth known as bear and bull markets. Since October 12, 2022, when the S&P 500 closed at its lowest point of the recent bear market—3,577—the index has surged nearly 70% by mid-December 2024. This milestone marks the current bull market as over two years old, a threshold that, historically, bodes well for investors looking ahead to 2025.
As we approach a pivotal year for financial markets, understanding the patterns of past bull runs can offer valuable context. While history doesn’t guarantee future results, it does reveal trends worth noting—especially when it comes to long-term investment strategies.
What Past Bull Markets Reveal About the Third Year
Since 1949, there have been 17 bull markets that lasted at least two full years. Of those, 12 extended into a third year. More importantly, the majority of those third-year performances were positive, with six delivering double-digit returns. Only three of the 12 experienced negative returns in their third year.
This data suggests that once a bull market reaches its two-year mark, it often continues gaining momentum. The average third-year return across these historical cycles has been solid, reinforcing the idea that patience and consistency in investing tend to pay off.
For example:
- After the 2009 recovery from the financial crisis, the S&P 500 delivered a 3.5% return in its third year.
- Following the pandemic-driven crash of 2020, the market surged 74.8% in year one and maintained strong upward momentum.
- Even after deep corrections—like the 56.8% drop that ended in March 2009—markets have shown resilience and the capacity for multi-year growth.
These patterns indicate that durability in a bull market often signals underlying economic strength, investor confidence, and sustained corporate earnings—all factors that could support continued gains in 2025.
Why Historical Trends Matter—but Aren’t Everything
It's important to emphasize: past performance does not guarantee future results. While historical data provides insight, the stock market is influenced by unpredictable forces—geopolitical events, inflation shifts, interest rate decisions, technological disruptions, and human psychology.
Market movements are often driven more by emotion than logic. Fear can trigger sell-offs even during strong economic conditions, while overconfidence can inflate valuations beyond sustainable levels. This behavioral component makes precise forecasting nearly impossible.
That said, recognizing patterns isn’t about predicting exact outcomes—it’s about managing expectations and avoiding emotional decision-making. Knowing that most two-year-old bull markets have continued into a third year can help investors resist panic during volatility and stay committed to their plans.
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Focus on Consistency, Not Timing
One of the biggest mistakes investors make is trying to “time” the market based on historical trends. Seeing that many bull markets continue into a third year might tempt some to rush into the S&P 500 now, hoping to capture near-term gains before a potential peak.
But timing the market is notoriously difficult—even for professionals. Instead, a better approach is consistent, long-term investing.
Strategies like dollar-cost averaging (DCA) eliminate the need to predict market tops or bottoms. By investing fixed amounts at regular intervals—monthly or quarterly—you automatically buy more shares when prices are low and fewer when they’re high. Over time, this smooths out volatility and reduces risk.
Consider this:
- An investor who started DCA into the S&P 500 in late 2022 would have bought at relatively low prices during recovery.
- Even if the market plateaus or dips in 2025, consistent contributions allow for continued accumulation without emotional interference.
Long-term focus also helps combat FOMO (fear of missing out)—a common driver of impulsive trades that often lead to losses. Whether the bull market extends into 2025 or transitions into a correction, disciplined investors are better positioned to weather uncertainty.
Core Keywords:
- Bull market
- S&P 500
- Stock market trends
- Dollar-cost averaging
- Long-term investing
- Market timing
- Historical returns
- Investor strategy
Frequently Asked Questions
Q: How long do bull markets typically last?
A: On average, bull markets last about 3.8 years. Some extend longer—like the 11-year run from 2009 to 2020—while others end sooner due to economic shocks or policy changes.
Q: What defines a bull market?
A: A bull market is generally defined as a period when stock prices rise by 20% or more from recent lows, accompanied by strong investor confidence and positive economic indicators.
Q: Should I invest more now because the bull market is two years old?
A: Not necessarily. Age alone isn’t a reason to increase exposure. Focus on your personal financial goals, risk tolerance, and investment plan rather than market age.
Q: What usually ends a bull market?
A: Common triggers include rising interest rates, inflation spikes, recessions, geopolitical crises, or asset bubbles bursting. No single factor guarantees an end, but deteriorating fundamentals often precede downturns.
Q: Is it safe to assume the bull market will continue in 2025?
A: Nothing is certain. While history shows favorable odds for continued growth after two years, unexpected events can shift conditions rapidly. Diversification and risk management remain key.
Q: How can I protect my portfolio if the bull market ends?
A: Maintain a diversified mix of assets, avoid over-leveraging, use dollar-cost averaging, and keep an emergency fund separate from investments to avoid forced selling during downturns.
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Final Thoughts: Stay Informed, Stay Disciplined
The current bull market turning two years old is more than just a milestone—it’s a signal that we’re in the later stages of a historically significant cycle. While 2025 may bring new challenges or continued growth, what matters most is how prepared you are.
Use history as a guide, not a roadmap. Let data inform your decisions, but anchor your strategy in discipline and long-term vision. Whether you're building wealth gradually or adjusting allocations for changing conditions, consistency beats speculation every time.
As markets evolve, so should your understanding—without succumbing to hype or fear. The best investors aren’t those who chase trends; they’re the ones who stay steady, informed, and focused on what truly drives lasting financial success.