Secular Bull Market 1949 - 1966

Wound Up and Ready to Move:

The end of World War II in 1945 set the stage for the next big bull market. In 1949 the Dow was wound up and ready to move as it exploded to the upside over the next 16+ years. From June 1949 to January 1966 the Dow Jones Industrial Average generated a 16.58% annual return for those investors willing to bet on the strong U.S. economy. During this secular bull phase the Dow had weathered the Korean War, McCarthyism, Sueze Crisis, Cuban Missile Crisis, the assassination of JFK and finally the beginning of the Vietnam War (see Market Timeline).

During this strong secular bull market the Dow Jones experienced four cyclical bear markets (see Table 1). Each of these bear phases were relatively minor and certainly short lived. The average cyclical bear lost 16% from peak-to-valley yet these sell-offs were able to fully recover in about a year and a half on average. The mark of a strong secular market is how quickly the secular trend reasserts itself after a cyclical decline. There was no doubt that the 1949 - 1966 secular market was indeed very strong. Investors that followed the buy-on-dips strategy during this time were able to take full advantage of this bull run.

The chart, tables and timeline below will provide a complete overview of the 1949 - 1966 secular bull market.

Chart 1: Dow Jones Secular 1949 - 1966 Bull Market:

Table 1: Secular/Cyclical Market Review:

Market Timeline 1949 - 1966:

There was a new sense of optimism in the U.S. workforce after World War II. The economy was booming as large corporations created new jobs and new technologies such as the transistor and color televisions transformed the way people lived. The new secular bull market had begun.

• The Korean War begins; the Dow plummets 12% on July 13, 1950 in response to North Koreas crossing of the 38th parallel.
• Guided by the war efforts of Gen. Dougles MacArthur the Dow Jones posted profits through July 1953 when a truce was Declared.
• In 1954 the Dow Jones posts a new high surpassing the levels set prior to the 1929 Crash (25 years in the making).
• The Senate censures McCarthy in mid 1954.
• The Dow passes the 500 level in 1956.
• Tensions steaming from the Sueze Crisis in July 1956 and the launch of Sputnik in October 1957 help sustain the Dow's 16% slide to the end of 1957.
• John F Kennedy is elected President in 1961.
• The failure of the U.S. invasion at the "Bay of Pigs" in early 1961 does little to derail the Dow Jones bull rally.
• In 1962, however, the Dow fell by over 23% based on the world threat of the Cuban Missile Crisis.
• During the course of cyclical bull phase 1962 - 1966, the nation experienced the Kennedy Assassination (Oct. 1963), the commitment of troops in Vietnam (Mid 1964), Nikita Khrushchev's removal from Soviet Leadership (Oct. 1964), and the shooting of Malcome X (Feb. 1965). The Dow generated a 75% profit during this three and a half year time period.

At the end of the 1949 - 1965 secular bull market the Dow Jones had generated a healthy annual rate of return of 11.28%. This strong phase in the market would come at a cost however as continued civil unrest would lead the market into the next secular bear market beginning January 1966.

>>> Click to view the next secular market in the Dow Jones covering the 1966 - 1982 period.

Table 2: Annual Returns by Year:

Detailed Timelines for Other Secular Markets:

Secular 1929 - 1949 Bull Market
Secular 1966 - 1982 Bear Market
Secular 1982 - 1999 Bull Market
Secular 1999 - Present Bear Market

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