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Stocks' bull market, two years later: Hefty gains and still resilient

March 9, 2011 |  3:13 pm

Two years ago Wednesday, the vicious stock bear market of 2008-2009 finally hit rock bottom.

Since then, the new bull market has shown amazing resilience, as noted in this Times story. If you haven’t been along for the ride -- say, because it just didn’t feel like an economic recovery -- you’ve left a lot of money on the table.

The Standard & Poor’s 500 index, at 1,320.02 on Wednesday, was up 95% from the 12-year low of 676.53 reached March 9, 2009.

Shares of smaller companies have posted bigger gains, which is typical in the first stages of a bull market. The Russell 2,000 small-stock index is up 139% from two years ago.

Bullstat The market has had just two seriously scary months in the last 24: the May/June 2010 slump that was fueled by the ugly combination of the European debt crisis, a slowing U.S. economy and the reaction to the May 6 “flash crash” on Wall Street.

The S&P 500 fell 16% from April 23 to July 2. By the market’s unofficial rules, that was a “correction” within a continuing bull move, which got going again on July 3.

Had the S&P index fallen more than 20% that would have been enough to categorize it as a new bear market.

The definition of a new bull market, meanwhile, is squishier. Many Wall Street pros want to see more than just a 20% rise from a bear market low before calling the move a new bull. Some judge a bull by the duration of the advance and the amount of trading volume.

The bull/bear delineations are of greatest interest to market chart-watchers, historians and journalists, of course, but they also can play important roles in affecting investor psychology.

If the S&P had slumped more than 20% last spring, the headlines would have declared a new bear market -- which might have further depressed investor sentiment and triggered more selling by people who weren’t willing to take the chance of suffering through another epic meltdown.

So where are we now? Despite the surge in crude oil prices over the last few weeks, major stock indexes haven’t sustained much damage. Sell-offs have quickly petered out. No doubt, the Federal Reserve's easy-money policies continue to support share prices.

On Wednesday, stocks ended with minor losses as U.S. oil prices in New York slipped 64 cents to $104.38 a barrel. The Dow Jones industrial average eased 1.29 points to 12,213.09 after being down as much as 57 points.

At Wednesday’s close, the Dow was off just 1.4% from its 32-month high of 12,391.25 reached Feb. 18. The S&P 500 has slipped 1.7% since then, and the Russell 2,000 index is down 1.6%.

If you're trying to decide whether to pull some money out of stocks, the market is giving you time to think. The flip side is that, if you were hoping for a sharp pullback to buy in at lower prices, you're still waiting. 

-- Tom Petruno

Photo: The bull statue in Lower Manhattan, near Wall Street. Credit: Kirk McKoy / Los Angeles Times