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How this bull market stacks up to history

"Happy birthday, dear bull market, happy birthday to you!"

Two years ago today the stock market abruptly turned the corner and shifted from mega-bear mode into mega-bull mode. Many were left flat-footed, disbelieving the change. (Some are still flat-footed, disbelieving the change!) This is how the stock market works. At the moment of maximum pessimism, the phoenix begins to rise from the ashes.

In honor of the bull's birthday, Mark Hulbert has analyzed a number of key statistics comparing this bull market to past bull markets. Here are a few that stand out:

• Since the beginning of the last century, there have been 33 bull markets prior to the current one. It turns out that only 14 of those 33 bull markets even lived to their second birthday.
• Of the 14 prior bull markets that lived at least two years, on average, the Dow was ahead 43.6% on their second birthday. That's just half the Dow's two-year gain of 86.7% in the current bull market.
• The current bull market in its first two years gained more than all but two of the past 33 bull markets.
• Of the 14 prior bull markets that did make it to their second birthdays, on average, those bull markets lived to be over three years old.

Add it all up and what does it mean? Hard to say. One thing seems clear though. Unprecedented stimulus and central-bank liquidity have led to one of the more dramatic two-year bull runs of the past century.

The Fed continues to keep interest rates extremely low, while simultaneously continuing its massive bond purchases via the QE 2 program. Will that be enough to keep this bull market running for a third year? It's impossible to say. But long-time readers know that I personally put a decent amount of weight on the old adage, "Don't fight the Fed." When liquidity is high, that money has to flow somewhere.

My guess (and it is just that) is that this bull market will continue to roll along until the Fed starts tightening, either by raising rates or ending its "quantitative easing" policies. But the past few years have been filled with surprises, so another is certainly possible.

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