What Matters About Market History, and the Worldwide Bull Market

0:04Ryan Detrick:What we can learn from market history and the worldwide bull market. That and more on this Saturday personal finance edition of Motley Fool Money.

0:21Ryan Detrick:I'm Robert Brokamp and this week I speak with Ryan Detrick, the chief market strategist at Carson Group, and a consistent source of data about the market's past and what it could say about the future. But first, some news from this week. According to Callum Thomas of Top Down Charts, 80 % of the 70 companies he tracks have stock markets that are up at least 20 % off their 52-week lows. He writes that this indicator has rarely been above 50 % over the past couple of decades, and a surge like this is usually a good sign. Previous spikes have happened in 2003, 2009, and 2020, which were all good times to be an investor.

0:56Ryan Detrick:Looking more locally, a recent graphic from Bloomberg illustrates that the year-to-date rally in U.S. stocks is the broadest ever, as there's a record number of individual stocks in the S &P 500 that are outperforming the index. That said, not every stock is doing well, including some of the biggest tech-oriented names, which has resulted in lower valuations for those stocks. In fact, according to Matt Cermonaro of Ritholtz Wealth Management, the forward P.E. of the MAG7 minus Tesla is now below the forward P.E. of the consumer staples sector, which has returned almost 15 % so far this year. Next up, mortgage rates are dropping.

1:33Ryan Detrick:The current 30-year fixed rate is 6%, down around 80 basis points from a year ago and the lowest level since 2022. Lower rates might make homeownership more affordable for some buyers, especially as price growth is slowing. This past week, Standard Poor's announced that the Case-Shiller national home price index rose an annualized 1.3 % in December, down from 1.4 % in November. In other home loan news, a report from the Federal Reserve Bank of New York, published on Tuesday, says that the total amount in home equity lines of credit, otherwise known as HELOCs, rose in the fourth quarter of 2025, which was the 15th consecutive quarterly increase.

2:11Ryan Detrick:The total amount in HELOCs is now$434 billion, up 36 % over the past four years. According to bank rate, the current average interest rate on a HELOC, is 7.3%. And now the number of the week, which is 12. That is the number of calendar years that the S &P 500 has lost more than 10 % since 1928, according to a report from Barry Gilbert of Carson Group. In other words, the market has been profitable or lost less than 10 % in almost 88 % of calendar years. There are four decades that didn't see any years of 10 % plus declines, those being the 1960s, 1980s, 1990s and the 2010s. How much does that history matter?

2:54Ryan Detrick:Well, that's the topic of my next conversation when Motley Fool Money continues.

3:17Ryan Detrick:or Umzug. Stimmt, krass. Fühlt sich gar nicht wie Steuern an. Steuern erledigt? Safe. Mit Wieso Steuer? We at The Motley Fool believe that the stock market is the best path to long-term wealth and we have the historical data to back it up. But how much does history matter in our ever-changing world and what past trends are likely to persist? Here to talk about that and much more is Ryan Dietrich, the chief market strategist at Carson Group, the co-host of the Facts vs. Feelings podcast and one of my favorite sources of insightful or just fun stats about the market. Ryan, welcome to Motley Fool Money.

3:53Robert Brokamp:Robert, thank you so much for having me. Obviously, a big fan of you and then the Motley Fool. I mean, geez, like a lot of people, I started reading Motley Fool a long time ago when I got into this industry. So it's a real honor. You quote me all the time, so thank you for that. But it's an honor to get to talk to each other about how we see the world. So thank you again for having me.

4:11Ryan Detrick:Thank you for those kind words. It is great to have you here. In your podcasts, your articles, your social media posts, you provide just a regular stream of facts about historical trends. With much of that data going back to 1950s, sometimes as far back as the 1920s, what do you say to someone who says, you know, things are different today? Way back then, you know, they didn't have the internet. They didn't have low-cost index funds, commission-free trading apps in our pockets. We've transitioned from an industrial to a services economy. How much does history matter?

4:41Robert Brokamp:Ooh, that's a good one there. I love the quote by Mark Twain, history doesn't repeat itself, but it often rhymes, right? And you look at history. Yes, there was no internet 50 years ago. Now, of course, we have AI. And there's always something out there. I think what's always true, though, is fear and greed, right? In April, when the stock market was down, it was 20 % and crashing. There was a lot of fear out there. In the late 90s, there's a lot of greed out there. Those are things that are never going to go away. Maybe some of the, I don't know, the people at the table, so to speak, whether it be computers or algorithms or hedge funds or high frequency trading, all that stuff.

5:16Robert Brokamp:It is different than the past, but what gets us places, and we're going to get into some more of this, is earnings and profit margins and the Fed and all that stuff. That hasn't really changed, in my opinion. So we love using history. I think what I like about using history is it does show a guide, right? It's not gospel. I mean, it's a midterm year. Historically midterm years don't do that well. Well, listen, we're still pretty optimistic when we get into that stuff, but it shows a guide. We've been through a lot of bad stuff before. We've had a lot of good stuff before. That's why I think it helps your average investor.

5:45Robert Brokamp:I work with advisors, a carcer group of financial advisors every single day and their clients. And I think that's why it's so important to kind of show we've been through this before. Yeah, it's different. But at the same time, is it really that different? Fear and greed is still what drives markets.

5:58Ryan Detrick:A lot of what you do in your writing is to say, OK, this is a current set of circumstances. And based on history, this is the likelihood that the market will go up. Here's the median and average return. How do you distinguish between trends that are valid versus a spurious correlation, which is borrowing from the title of one of your recent articles?

6:16Robert Brokamp:Well, so you're saying the fact that an NFC team just won the Super Bowl by more than 10 points. The S &P 500 is higher 19 out of 21 years. You're saying that's not a reason to be bullish? I know. Playful, playful. I get it.

6:29Ryan Detrick:By the way, the median return, almost 15%. Very good news.

6:32Robert Brokamp:Yeah, very good news there. Or this is the year of the horse. And when animals walk on four legs, the market does a lot better than the times animals either use two or like a snake crawl. But nonetheless, nonetheless, or slither. I guess a snake slithers. Is that what we call it? It doesn't matter. It doesn't matter. Yeah, that's the fun stuff. But at the end of the day, we look at a lot of data. I work with a guy named Sonu Varghese, our chief macro strategist, and he's my co-host on Facts vs. Feelings. And we look at the macro backdrop and we look at all these different factors. And it's not like one thing matters, right?

7:03Robert Brokamp:I mean, we took a big top-down approach and focus on all this different stuff. And to us, you know, again, it's like, what drives long-term stock gains? Well, I think it's earnings. I think it's earnings, right? And we have seen record earnings. We have seen record profit margins. We continue to see positive things. I get it. I know a lot of listeners probably feel this way because consumer confidence is very, very low. We just got some data and it's still very low. In some cases, consumer confidence is lower than it was during a hundred-year pandemic. Yet, retail sales are still strong. You know, auto sales are still strong.

7:33Robert Brokamp:So it's this interesting dichotomy. People feel one way and do another. And to put a bow on this, we think following the hard data. Three years ago, Carson Group was pretty optimistic. Not many people were. We were laughed at. We were mocked for that optimistic few. We should follow the hard data. The hard data continues, in our opinion, to suggest things are strong. And again, that is what the Fed is up to. That is what fiscal policy is up to. That is earnings. All these different things we pay attention to. And it's fun to talk about animals on four legs. I get it, but no, we don't invest in that.

8:02Robert Brokamp:We focus on the fundamentals.

8:03Ryan Detrick:As you just hinted out there, you cover a lot of ground in your articles, podcasts, on social media, macro, some fundamental, even some technical analysis. You mentioned earnings, but if you had to narrow it down to maybe three or five things that are most important to pay attention to, what would they be?

8:22Robert Brokamp:Well, one of them I already kind of talked about, so we'll get that out of the way right now. Earnings, right? I mean, earnings are hitting record highs. Profit margins are hitting record highs. We're looking at some of the best revenue this fourth quarter that's wrapping up since we've seen in like four years. So that's an important one. That's number one. I'll probably do three. So that's number one. Now, I do have a what we call a CMT. I'm not a country music person. That's not what that means. I'm a chartered market technician. So I do like to look at technicals, right? Relative strength, the seasonality stuff that I'm kind of known for, market sentiment, all these different things.

8:54Robert Brokamp:And when you do that, there's something called an advanced decline line, Robert. It's a cumulative basis how many stocks going up versus down every single day. Now, keep this real simple. That's market breadth. Market breadth leads price. Now, in the late 90s, market breadth peaked and started to roll over. That was a warning that something was wrong under the services. Literally, the only thing going up was tech stocks, right? In 2006, 2007, financials started to go down. A lot of other groups started to go down. There were warnings when market breadth was weak. Where are we right now? Literally a week ago, the S &P 500's advanced decline.

9:25Robert Brokamp:I hit a new all-time high. The New York Stock Exchange, advanced decline line, hit an all-time high. Mid caps, all-time high. Small caps, 52-week high. What am I getting at? This is still a healthy, strong bull market being led by a lot of stuff. I get it. Technology is lagged. We understand that. But the lifeblood of bull markets rotation, we are seeing that. So earning strong, that's good. Advanced decline lines, market breadth still solid, that's good. The third one that I would say is very important and we follow every day are the credit markets, right? If the credit markets see a monster under the bed, there'd be more stress in things like high yield spreads, triple B spreads, kind of keep this high level and fairly simple.

10:02Robert Brokamp:We're not seeing that at all. I mean, in 2023, the regional bank crisis, high yield spreads really didn't move that much. It was saying, you know, it's not as scary as they're telling you on TV. 2024, when we had the yen carry trade unwind, and I know maybe some people remember this, trust me. For a few days in August of 24, it was a pretty scary period. Japan was crashing, gold markets crashing. The credit markets weren't worried. even during the crash we had around Liberation Day. The bottom line, credit spreads hung in there. I mean, the credit markets weren't worried. So right now, we're worried, credit spreads are just fine, okay?

10:32Robert Brokamp:I know the AI stuff and the worries about software. Yes, maybe some credit spreads on some of the more specific technology companies have blown out a little bit. But overall, the credit markets are functioning just fine. Credit to me are the smartest people in the room. So credit's strong, breadth is strong, earnings are strong. Those are three things that we've seen for honestly three years now. And knock on wood, They're going to continue to be strong. That's why we remain overweight equities and optimistic in 2026.

10:56Ryan Detrick:So you're optimistic about the market. You're also optimistic about the economy. You don't see a recession on the horizon. You just highlighted many reasons for the optimism. Anything else people should be looking at or that you're factoring into the fact that you think the economy is probably going to be okay?

11:10Robert Brokamp:Yeah. You know, we talked a lot about the U.S., obviously, because we're U.S.-centric. But around the globe, I think it's really important to point this out. I mean, most investors know this. The rest of the globe has done really well relative to the U.S. over the past year or so. But on an economic front, we've seen a lot of growth coming from emerging markets, coming from developed international around the globe. I mean, we are seeing that. So it's really a kind of global story in terms of economic growth and stock market returns. And I think that's a real positive thing. You know, things that we like to look at, business investment.

11:40Robert Brokamp:I mean, business investment is strong. AI investment. I mean, I know a lot of people talk about this. AI CapEx spending continues to be strong, showing virtually no slowdown. Consumption is still solid. You look at all these things together. Yeah, housing's taken away from GDP six out of seven quarters. Okay, we get it. That's the weak part out there. But the reality is we're, what,$37,$38 trillion economy. There's some cracks out there, sure. But overall, I think our economy is still really on firm footing. And the great part about it, the rest of the globe is really on firm footing also. Less common here.

12:10Robert Brokamp:Look at copper. Call Dr. Copper. My copper is flirting with all-time highs. People are gobbling up copper. it's hard to be bearish. The overall kind of global economy of copper was weak. You could be bearish if it was weak. It's not. And that's an important thing from our point of view as well. So overall, it's a nice global bull market and economy out there.

12:28Ryan Detrick:One thing related to the economy that, of course, is of concern or that people pay attention to both economically and politically is inflation. Talk a little bit about why you think inflation will likely stay closer to 3 % than the Fed's target of 2%.

12:43Robert Brokamp:Well, yes, we can get out some rabbit holes with this one if you want. You know, the Fed's target's 2%. I mean, the Fed itself has said, yeah, that's, you know, wink, wink, nudge, nudge. It's probably not around 2%. We've been saying for a while that we think we're going to be in a 3 % inflation world versus 2 % inflation world. Now, I'll be very clear here. If inflation were to soar to 6 % the next six months, yes, this would upset the apple cart. This would mean the markets are probably in trouble. We're probably going to have higher interest rates, not as many Fed cuts. That wouldn't be a bullish scenario.

13:10Robert Brokamp:But you look at history, going back like 150 years, inflation's averaged about three and a half percent. All right, so we're right, core PCE, the Fed's favorite measure of inflation, came in last Friday, right about three percent year over year. We don't think that's a bad thing. I mean, we've been flirting with three percent for a while now. And last I checked, the economy's doing pretty good. The stock market's hanging in there. And the reality is, look around, look at the previous answer, commodity prices. As everybody knows on this show, how are commodity prices doing? Yeah, they're higher, right?

13:37Robert Brokamp:So that is kind of upward pressure on inflation. But the other part of this, something called shelter. Shelter is about 42 % of core DCE. Keep this fairly simple. That is deflationary in a way. I mean, we are seeing housing prices, rent prices. Rent prices have been negative year over year from Zillow and apartment lists for like a couple of years now. And then the government's data is delayed. Keep it easy here. We think the shelter is going to kind of put a lid on inflation. So we're going to have inflation right around 3 % or so. that's okay. We've been seeing it. That's where we are. But again, we manage billions of dollars on the Carson team, last comment here.

14:11Robert Brokamp:And for years, we've been positioning for a world of a little bit more inflation, a little bit more being around 3 % than 2%, maybe a little bit less bonds, maybe a little bit more stocks. We do have some gold. We have some managed futures. I say, if you drop it, it hits your foot and it hurts. You might want to own a little bit more in that your portfolio than you did, say, 10, 15 years ago. And that's how we position it. It's been working really well, honestly. And we think it will continue with a little bit higher inflation world around 3%.

14:33Ryan Detrick:You mentioned the sell-off in some stocks, some tech-related software stocks. And in your podcast, you reminded folks that a year ago, we were all talking about DeepSeek and what happened then. And that ended up being a pretty good buying opportunity. Is that generally what you think right now when you see some of these names going down 10, 15, 20 %?

14:51Robert Brokamp:Yeah, it is. Yeah. So on facts versus feelings, Sonia and I talked about that recently. Just a year ago right now, we're all worried about DeepSeek. And the worry was there's this cheap Chinese chatbot that's going to come in and mess everything up and people aren't going to be in investing in AI anymore, going to be investing in CapEx. That literally were the headlines a year ago. And now it's almost laughable when we see all the AI spending that we're still seeing. And where we are now, we think it's somewhat similar, right? We are throwing the baby out with the bathwater. Yes, there are companies, there are industries that are in trouble because of the revolutionary changes we're seeing with AI.

15:21Robert Brokamp:But when it comes specifically to software, we hear some really solid companies with some really solid moats that are still making a lot of money that have really pulled back. I mean, people say all the time, well, the market's expensive. I mean, parts of the market are, but last I looked, software is the cheapest it's been relative to the S &P 500 since 2013. All right. So that's it. Now, listen, I've tried to catch a falling knife before. Robert, maybe you have. It's not very smart because sometimes you cut yourself. It looks cool when you do it. But I mean, I think it makes sense for someone who has been waiting for parts of the market that are going to be cheaper.

15:53Robert Brokamp:Software is really cheap. If you have some technology, what we did in the money we run, we sold a little bit of broad-based technology ETFs and bought a little bit of software because we think that's going to come back in six to nine months. We're going to look back and see once again, our opinion, the large cap tech wasn't dead. The Mag7 wasn't dead. Yes, this was volatile. Yes, this was unfortunate for a lot of investors that got over the top in large cap tech and Mag7 to start this year. But that's why we stay diversified. That's why we don't always chase a shiny object. If it's the best group for three years in a row like Mag7 was, it probably won't be the best group again.

16:23Robert Brokamp:Last comment on this, Time Magazine had that cover. AI Architects with a person of the year, all the big leaders in AI. When I saw that cover, I was like, you know, that's a pretty high bar. I mean, AI is incredible. The technology we have is amazing, but that's a really, really high bar. And sure enough, you know, MAG7's lagged a little bit. I don't think that's abnormal, but I do think there's some great opportunities for investors here to step up. With this old saying, stock markets only place things go on sale. Everyone runs out of the store screaming. I'm seeing a lot of screaming running out of the store.

16:52Robert Brokamp:I think savvy investors might use this opportunity and you look back and you're to thank yourself down the road.