Historical Parallels

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Wendy Boyd

Cramer: The Bull Run Survived These 10 Challenges

The S&P 500's bull run reached a record duration of 3,453 days on Wednesday, and CNBC analyst Jim Cramer said the market had to overcome obstacles to reach this point. 

“I think it’s important to try to learn from this epic run,” Cramer said Tuesday. “When you analyze a bull market, you need to realize that it’s constantly climbing a wall or worry covered in barbed wire and cut glass.”

On Tuesday’s “Mad Money,” Cramer named 10 negative catalysts that he said could have derailed the bull market since March 2009:

1. Skepticism.

The bull market has had doubters since the beginning. Cramer said bull markets tend to die when investors are too euphoric over stocks.

2. High Valuations.

Just when it seemed as if earnings multiples were becoming prohibitively high, corporate tax cuts gave earnings numbers a major shot in the arm.

3. Political Turmoil.

Whether it be gridlock in Congress, government shutdowns, international trade wars or major health care reforms, the S&P 500 trudged higher through it all.

4. The Federal Reserve.

Throughout the first few years of the rally, critics said the Fed was artificially inflating stock prices via its quantitative easing program. Now that interest rates have started to tick higher, the rally has continued.

5. U.S. Debt Downgrade.

Cramer said the 2011 S&P downgrade of U.S. government debt from AAA to AA+ was been one of the darkest moments in the bull market.

6. Industry Bear Markets.

Despite uninterrupted gains in the market as a whole, bear markets in housing, oil and semiconductors have weighed on overall returns.

7. European Debt Worries.

The U.S. economy has been steady throughout the rally, but economic crises in Greece, Italy and Turkey have all threatened the stability of the European economy.

8. China Concerns.

Concern over an economic slowdown in China was the driving force behind the steep S&P 500 sell-off in 2015. Today, the ongoing U.S. trade war with China is a brand new threat to the bull market.

9. Inverted Yield Curve.

An inverted yield curve — in which yields on two-year Treasury bonds surpass yields on 10-year Treasury bonds — has historically been a reliable indicator of a recession, and the yield curve has been relatively flat in recent quarters.

10. FAANG Valuations.

Facebook, Inc.  Amazon.com, Inc. , Apple, Inc. , Netflix, Inc.  and Alphabet Inc   have collectively accounted for a huge chunk of the U.S. market gains throughout the bull market, and Cramer said most market analysts now see the group as overvalued.

Despite the obstacles, the S&P 500 has kept on truckin' in 2018. The SPDR S&P 500 ETF Trust SPY 0.3% is up another 7.3 percent year-to-date.


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