Four-Year Bull Market: What History and Bond Yields Mean for Investors

The S&P 500 bull market is approaching its fourth anniversary, prompting investors to ask whether the rally can continue. Long advances often create concerns about excessive valuations, overoptimism and an overdue correction.

Historical data offers some reassurance. The Motley Fool reports that every S&P 500 bull market reaching its fourth anniversary continued beyond that point. Source 1 Yahoo Finance has similarly examined the market’s fourth anniversary and the historical tendency for mature bull markets to continue. Source 2

The more immediate concern may be rising bond yields. Higher yields can pressure stock valuations, increase corporate borrowing costs and make bonds more attractive relative to equities. MarketWatch has identified bond yields as a potential threat to the rally. Source 3

The four-year milestone is not an automatic sell signal. It is a reason to review market conditions, portfolio allocation, valuations, earnings and personal financial goals.

What Defines a Bull Market?

A bull market generally describes a sustained rise in asset prices. For stocks, analysts commonly define it as a gain of at least 20% from a previous market low.

The measurement depends on the index and starting point. Analysts may use the S&P 500, Dow Jones Industrial Average, Nasdaq Composite or a total-return index. The starting date also matters because markets can rally in stages after a major decline.

The S&P 500 remains a primary reference point for U.S. equities because it represents large companies across many industries. It does not measure every investor’s portfolio, but it provides a useful view of the large-cap stock market.

A bull market does not rise every day or month. Long advances can include sharp pullbacks, volatility and periods when some sectors decline while others gain.

Why Market Age Attracts Attention

Investors compare the current cycle with previous bull markets to gain context. A longer rally can raise concerns about high valuations, excessive optimism, slowing growth, interest-rate changes, recession risk and speculative behavior.

These concerns are reasonable, but market age alone does not determine when a rally will end. Some bull markets end quickly because of recession or financial stress. Others continue for years as earnings growth, productivity and economic expansion support higher prices.

Market age is therefore a descriptive statistic, not a timing tool.

What Historical Data Shows

According to The Motley Fool, every S&P 500 bull market that reached its fourth anniversary continued beyond that point. Source 4

This pattern suggests that reaching four years has historically been more consistent with continued gains than with an immediate market top. A bull market that survives several years may have support from corporate earnings, employment, consumer spending and economic expansion.

However, the historical sample is limited. Each cycle developed under different conditions involving inflation, Federal Reserve policy, earnings, government spending, credit and geopolitical risks. History provides context, not a guarantee.

A four-year bull market is not automatically due for a crash. A pullback, correction, bear market and recession are different events:

• Pullback: A temporary decline that may last days or weeks.
• Correction: Generally a decline of about 10% or more from a recent high.
• Bear market: Generally a decline of at least 20%.
• Recession: A broader contraction in economic activity.

Long bull markets can experience multiple corrections without ending. A decline becomes more serious when it combines with weakening earnings, tighter credit, rising unemployment or a sustained loss of economic momentum.

The Main Threat: Rising Bond Yields

Higher yields affect stocks through several channels. First, they can make bonds more attractive relative to equities. If government bonds offer higher income with lower price volatility, some investors may reduce their equity exposure.

Second, interest rates affect the value of future corporate earnings. When rates rise, future cash flows generally become less valuable today. This effect can be especially significant for companies whose expected profits lie far in the future.

Third, higher rates increase borrowing costs. Companies refinancing debt may pay more interest, reducing net income and limiting investment. Consumers may also face higher costs for mortgages, auto loans and credit balances.

Growth-oriented and high-valuation stocks can be particularly sensitive to rising yields because their prices often depend on strong future growth.

When Higher Yields Signal Strength

Rising yields are not always negative. They may reflect stronger economic growth, higher corporate earnings, persistent inflation, increased government borrowing or tighter monetary policy.

If yields rise because the economy is expanding and businesses are producing stronger profits, earnings growth may offset some valuation pressure. Banks, insurers, industrial companies and other economically sensitive businesses may benefit from certain forms of economic strength.

The effect on stocks can therefore be mixed: higher yields may reduce the price investors will pay for earnings, while stronger earnings increase companies’ value.

When Higher Yields Become a Risk

The more concerning scenario occurs when yields rise quickly while economic conditions deteriorate. Risk increases if inflation remains elevated, central banks maintain restrictive policy, growth slows, refinancing becomes more expensive, consumers reduce spending or credit conditions tighten.

This combination can pressure both valuations and earnings. Investors may demand lower stock prices while businesses face weaker revenue and higher costs.

What Could Support the Bull Market?

Corporate Earnings Growth

Earnings growth is one of the strongest potential supports for stock prices. Rising profits can make current valuations more reasonable over time.

Investors should monitor earnings estimates, revenue growth, profit margins, management guidance, pricing power, capital spending and productivity. A rally supported by broad, sustainable earnings growth may be more durable than one driven mainly by expanding valuation multiples.

Economic Resilience

Stable job creation, consumer spending, business investment, productivity gains, healthy household balance sheets and available credit can support corporate revenue and employment.

Strong economic growth can also keep inflation and interest rates higher than expected. The key question is whether economic strength produces enough earnings growth to offset pressure from higher yields.

Market Breadth

A market rising because many companies and sectors are advancing has a different foundation from one driven by a small group of dominant stocks. Broader participation may indicate wider confidence, improving economic expectations and stronger participation from smaller and cyclical companies.

Narrow leadership does not prove that a decline is imminent, but it can make index performance more dependent on a limited number of stocks.

What Could Weaken or End the Rally?

Potential risks include:

• Persistent inflation and higher-for-longer interest rates
• A recession or corporate earnings downturn
• Excessive valuations
• Tighter lending standards and wider credit spreads
• Falling consumer demand and business investment
• Excessive investor concentration, leverage or speculation

Valuation can identify vulnerability, but it cannot reliably predict timing. Markets can remain expensive for extended periods, while apparently cheap markets can continue falling when earnings deteriorate.

How Investors Should Interpret the Anniversary

Do Not Treat It as a Sell Signal

Historical evidence does not support selling solely because the bull market is four years old. Moving entirely out of stocks can create missed-opportunity, tax and reinvestment risks.

The better question is whether the portfolio still matches the investor’s goals, time horizon and ability to tolerate losses.

Review Portfolio Allocation

A strong rally may leave an investor with more stock exposure than intended. Review stock and bond percentages, geographic exposure, sector concentration, individual-stock risk, cash reserves and taxable and tax-advantaged accounts.

Rebalancing can restore the intended risk level without requiring a forecast of the next market move.

Match Risk to the Time Horizon

Investors with long time horizons may have more capacity to tolerate volatility. Those approaching retirement or needing money soon may need more liquid assets, lower volatility, a documented withdrawal plan and cash or short-term bond reserves.

Allocation should reflect personal circumstances rather than market headlines.

Use a Rules-Based Strategy

Regular contributions, periodic rebalancing, broad diversification, dollar-cost averaging where appropriate and a predetermined risk level can reduce emotional decisions. These methods cannot prevent losses or guarantee returns, but they can reduce the temptation to make major changes after one news cycle or volatile trading session.

Retirement Implications

Retirees face sequence-of-returns risk. Large losses early in retirement can cause greater damage than similar losses later because withdrawals may force the sale of assets after prices decline.

Retirees should review income needs, stock, bond and cash allocations, withdrawal plans, liquidity, diversification, inflation, healthcare costs and guaranteed income from pensions or Social Security. MarketWatch has also addressed retirement planning for people relying on a pension and 401(k). Source 5

Moving entirely to cash may reduce short-term volatility but introduces inflation and reinvestment risks. Remaining fully invested may also be inappropriate when near-term spending requires dependable liquidity. A written retirement-income plan can reduce emotional decisions during volatility.

Practical Checklist

Investors can monitor:

• Bond yields and interest-rate expectations
• Inflation and employment trends
• Corporate earnings revisions
• Consumer spending
• Credit-market conditions
• Market breadth and valuation measures

They should also:

1. Confirm the target asset allocation.
2. Rebalance if gains have changed portfolio risk.
3. Review exposure to high-volatility sectors.
4. Maintain an emergency fund outside long-term investments.
5. Check tax consequences before selling appreciated assets.
6. Update retirement-income assumptions.
7. Avoid major changes based on a single news cycle.

Conclusion

Historical S&P 500 data cited by The Motley Fool shows that every bull market reaching its fourth anniversary continued beyond that milestone. The record is encouraging but not predictive.

Rising bond yields remain a central risk because they can pressure valuations, increase borrowing costs and challenge companies whose prices depend on distant future growth. The effect will depend on why yields are rising and whether earnings can keep pace.

Investors should not sell solely because the bull market is turning four years old. They should review diversification, valuations, earnings, income needs, time horizon and risk tolerance.

The four-year anniversary is a reason to review a financial plan, not abandon it.

Frequently Asked Questions

Is a four-year-old bull market likely to continue?

Historical data indicates that every S&P 500 bull market reaching its fourth anniversary continued beyond that point. The pattern is encouraging but does not guarantee future gains.

Should investors sell stocks because the bull market is four years old?

No. Market age alone is not a reliable sell signal. Investors should consider allocation, goals, valuations, bond yields, earnings and risk tolerance.

Why do rising bond yields threaten the bull market?

Higher yields can make bonds more attractive, increase corporate borrowing costs and reduce the present value of future earnings. High-valuation and growth stocks may be especially sensitive.

What could support the stock market?

Continued earnings growth, resilient economic activity, stable employment, productivity gains and broader market participation could support the rally.

What could end the bull market?

Potential risks include recession, falling earnings, persistent inflation, higher-for-longer interest rates, excessive valuations and deteriorating investor confidence.

How should retirees respond?

Retirees should focus on sustainable withdrawals, liquidity, diversification and sequence-of-returns risk. A written retirement-income plan can reduce emotional decisions during market volatility.