The Life Expectancy of a Bull Market

The recent long period of low volatility in US capital markets was not an anomaly. Stability in the fears and anxieties that drive the flow of capital is the rule rather than the exception. Empirically, a stock-market advance is much more likely to persist than to be reversed. The residual life expectancy of a bull market does not diminish with age. Last month's selloff was not accompanied by material changes in the most reliable early-warning indicators of US growth and inflation. Business confidence and consumer con-fidence remain very high. Past stock-market plunges, especially the deepest, have been reversed within a few months. The recent turbulence is likely to signify a mere interruption in the ongoing bull market, not its end.