bull run celebrates its fifth anniversary this week. SPDR S&P
)rocketed 181% from its bear-market trough of $67.10 a share
reached on March 9, 2009.
PowerShares QQQ (
), tracking the 100 largest nonfinancial stocks on the Nasdaq,
vaulted 197%.SPDR Dow Jones Industrial Average (
) flew 132%.
The smaller the companies, the bigger the returns. SPDR
S&P MidCap 400 (
)soared 238%, while iShares S&P SmallCap 600 (
) blasted 264% higher.
"It stands as the second-strongest bull market since 1942 at
the five-year point, trailing only the 1982-87 bull market,"
Randy Frederick, managing director of trading and derivatives at
the Schwab Center for Financial Research, said in a note
The best five-year stretch kicked off in August 1982 and
rallied 225%. This time around, the gains were fueled by the
Federal Reserve's bond purchasing program, record-low interest
rates and massive corporate share buybacks plumping earnings per
"Five years ago (the consumer confidence index) was at a
record low level of 25 before bouncing back to 78 today, while
unemployment was 8.3%, on its way to 10%, before dropping to a
recent 6.7%," Todd Rosenbluth, director of ETF and mutual fund
research at S&P Capital IQ, said in an email. "Meanwhile,
during the fourth quarter of 2013, S&P 500 index earnings per
share have reached a record $28.45."
The stock market appears stretched as SPY in early 2013 flew
past its October 2007 pre-financial crisis high and now trades
20% above that peak on a nominal basis. But when priced in 2007
dollars, its prior high would be valued at $177.40 a share. So on
a relative basis, SPY has surpassed its 2007 apex by only 6%.
Foreign developed markets lagged the U.S. in the face of
Europe's debt crisis and Japan's two-decades-long economic
malaise.IShares MSCI EAFE Index (EFA), tracking developed foreign
markets, pales in comparison to the U.S. 94% gain.
Emerging markets outperformed all global markets early on as
the Federal Reserve's easy-money program prompted investors to
pursue more risk in higher-growth markets and higher-yielding
currencies. But the party ended last year due to a perfect storm
of events that included falling commodity prices, currency
devaluations, rising trade deficits and worries over the Fed
scaling back stimulus.
Spin-Off ETF Soars Fivefold
Guggenheim Spin-Off (CSD) made its investors 415% richer from
the bottom of the bear market by investing in companies that were
broken off from a parent company. The index tends to have less
volatility than the S&P 500 and typically holds midcap
stocks, said Andrew Corn, CEO of E5A Integrated Marketing in New
He created the underlying index and launched the ETF in
December 2006 as Claymore/Clear Spin-Off ETF, before Guggenheim
acquired Claymore. Corn said his research, using back-tested data
going back to 2001, showed that spinoffs outperform the
"Management, with incentives fully aligned with shareholders,
is free to run the company to their vision," Corn said in an
email. "This is without a parent company looking over their
shoulders or placing priorities, relationships, financing
decisions on the subsidiary made at a higher level."