Average investors since August 2000 have underperformed the great Reagan secular bull market by nearly 70% annually through September 2018, but the current secular bear marches on.
Average investors aren't just severely underperforming the Reagan bull, however. The average 5.77% per annum return since August 2000 also underperforms the S&P 500 annually from 1871-1982 . . . by 29%.
When the current secular bear ends is anyone's guess. While already long in the tooth, there's nothing that says it can't last even longer.
But you'll know it's over when stocks are universally shunned, as they were in the summer of 1982. Unfortunately, that would mean the S&P 500 would have to fall, and fall hard and deep, from here. In a worst case scenario that would mean to a level of, say, 283, which is today's inflation-adjusted level of the S&P 500 in July 1982, 89.6% south of yesterday's close at 2728. That's what it would take to match that buying opportunity, not just of a lifetime but of the whole history of the S&P 500.
On an inflation-adjusted basis a more likely future washout range would include a level something well north of 283, however, say between December 1987 at 527 and March 2009 at 898. The feeling has always been that the catastrophe of 2009 was arrested by draconian interventions, and that the market wasn't allowed to do its work and destroy the weak as it should have.
The Reagan secular bull was an extreme outlier in the history of the market. Nemesis is still lurking out there somewhere in its relentless quest to revert to the mean. Best not to stand in its way.
