The Most Hated Bull Market!

This claim, frequently heard heard on CNBC and Twitter and uttered by folks who’d like to take a victory lap, is far from reality.

This is something we covered in our 64-page Macro Market 2014 report for premium subscribers but we’ll share a bit of insight here as we share an excellent chart from our friend Tiho Brkan:

 

Equities As Percentage Of US Household Financial Assets

 

Also, take a look at this chart which goes back to the 1940s.

Stocks account for 28.7% of household assets. This is within a whisker of the levels seen at the 2007 top and very close to the levels seen in the mid 1960s.

The other chart shows 22% in 1945 and 15% in 1948.

The market roared higher from 1942 to 1946 before correcting 27% from 1946-1949.

The current figure is way too high for a secular bull market to have started a few years ago. In the early 1980s the figure was 10% to 15%. The current level of 28.7% was not reached until 1960 and 1997. If you use the 1942 and 1974 lows then those bull markets were 18 years and 23 years old before that level was reached.

Furthermore, the trailing PE on the S&P 500 is 19x earnings.

Cue the rebuttal about low rates making stocks more attractive. Rates were just as low in the 1940s and the ownership percentage never came close to 25%. The PE ratio in 1946 reached ~20 and three years later fell to below 10 after a cyclical bear market.