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Bull markets are 84% of the time. Divided by M2, 49%.

October 2, 2026

Since June 13, 1949 the S&P 500 has had 12 bull markets and 11 bear markets. The bulls averaged 5.4 years and +253% with dividends. The bears averaged 1.1 years and −32%. Add up the days and the index was in a bull market 84% of the time. The current one began on October 12, 2022 and is up 126% with dividends as of October 1, 2026, four years in.

The rule is the usual one. A bear market is a fall of 20% or more from a closing high, on daily closes. A bull market runs from that bear's low to the next peak that is followed by a 20% fall. The rule is applied to price; the figures include dividends. A 20% rally inside a bear that never clears the prior peak and is followed by a lower low stays inside the bear, which is what keeps 2000–02 and 2007–09 in one piece each.

On closing prices the drop from February 19 to April 8, 2025 was 18.9%. It does not reach 20%, so it counts as a correction inside the bull that began in October 2022. Versions that count it split that bull into 2.4 years at +78% and 1.5 years at +57%. The averages barely move.

Divide by M2

The dollar line measures the currency as well as the companies. S&P 500 ÷ M2 is the gauge we keep for that. It is 0.330 as of September 30, 2026, which we grade Overvalued, and record highs are easier when there is more money.

M2 was $286.6 billion in January 1959, the first month the Fed publishes it. It was $23,342.8 billion in August 2026, 81 times more. Over the same stretch a dollar in the S&P 500 with dividends reinvested became $914. Divide one by the other and the market is 11.2 times the money, a gain of 1,023% over 67 years, against 91,350% in dollars.

Each bull market is the gain from its low and each bear market is the loss from its high, so both lines return to zero at every turning point. Blue is the S&P 500 total return; above zero is a bull, below zero is a bear. Orange is that same return divided by M2, measured over the same dates. M2 begins in 1959, so the orange line starts with the December 1961 bear. Hover a point for the date and both returns.

The two lines are the same investment. The gap between them is the money stock. Apply the same 20% rule to the ratio and the calendar changes with it. Price divided by M2 decides where the bulls and bears start and end; total return divided by M2 is the figure on each one. There are 11 bull markets averaging 3.0 years and +89%, and 10 bear markets averaging 3.5 years and −31%. The bull share of the calendar falls from 84% to 49%.

Twenty years without a new high

In dollars, December 1961 to August 1982 is four bull markets and five bear markets, and the total return across the whole span is +211%. M2 grew 5.5 times. In M2 terms the index peaked on December 12, 1961 and did not get back. The rallies of 1962–65, 1966–68, 1970–71, 1974–76 and 1980 ran between +34% and +50% each, every one stopped below the 1961 level, and every one was followed by a lower low. The rule keeps all of it in one bear: 20.7 years, −43% with dividends, −74% on price. Price divided by M2 regained its December 1961 level on May 23, 1997.

Dividends change that decade. Total return divided by M2 sat above the 1961 peak on and off from May 1964 to July 1969, by at most 10%. Price divided by M2 never did.

The second long bear is March 2000 to March 2009: 9.0 years, −71%. The 2002–07 bull is +120% in dollars and +69% in M2, and its July 2007 peak sits below the March 2000 peak, so it is inside the bear. Price divided by M2 regained the March 2000 level on May 13, 2026.

Same dates, smaller numbers

Keep the dollar dates and divide by M2 over each span:

The current bull is the one M2 explains least. The money stock grew 8.7% in the four years from October 2022; the index doubled. At +108% in M2 terms it is the largest bull since 1990–98, and price divided by M2 is 1.9% above its March 2000 peak as of August 2026.

What dividing by M2 changes

In dollars, bears are short, bulls are long, and waiting works. Divided by M2, a good part of that waiting was paid for by the money stock. Strip it out and the index spent half of the last 67 years below a prior peak, including stretches of 21 and 9 years.

It also says the present run is different in kind. The big bulls before it rode M2 growth of 1.7 to 1.9 times. This one has had 1.09. Either the market has found gains the money did not supply, or it has run ahead of the one thing that reliably lifted nominal prices before. The S&P 500 ÷ M2 gauge takes the second reading, and it votes with the other gauges on the overvaluation probability.

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