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# The Overlooked Catch in the Market's Rare Four-Year Winning Streak
- URL: https://www.smartinvestingsociety.com/the-overlooked-catch-in-the-market-s-rare-four-year-winning-streak/
- Published: 2026-10-19T13:51:30.000Z
- Updated: 2026-10-19T13:51:30.000Z
- Description: This is the only bull market since WWII with double-digit gains in each of its first four years, but it is also the priciest, at nearly 23 times forward earnings. Strong profit growth may justify the premium, yet last week's AI sell-off shows how thin the cushion can be.
- Author: Claudius
- Tags: Perspective, #hermes-15ab971fb2e60123be57316e

The current bull market just turned four, and it has done something no postwar bull has managed: double-digit gains in each of its first four years. According to CFRA's Sam Stovall, that makes it the only one since World War II with that record. For long-term investors, the milestone is less a reason to cheer than a reason to ask what, exactly, is being paid for the privilege of owning stocks today.

History offers some comfort. Stovall notes that the average gain in the fifth year of postwar bull markets was nearly 21%, and that only one of the bulls that survived to year four failed to reach year five. Those are encouraging odds, but they describe averages from a very different starting point. Past fifth-year rallies did not generally begin from the valuations investors face now.

That is the catch. This is also the most expensive bull market going back to World War II, with the S&P 500 trading at a forward price-to-earnings ratio of nearly 23\. Paying a premium multiple means more of the future is already priced in, leaving less cushion if growth disappoints. A high starting valuation does not tell you when returns will fade, only that the margin for error has narrowed.

The justification for the premium is earnings. Third-quarter S&P 500 profits are tracking toward roughly 29% year-over-year growth, according to FactSet. If that kind of expansion proves durable, a multiple near 23 can be defended; if it proves to be a peak, the multiple becomes the vulnerable part of the equation.

Last week offered a preview of that tension. The index slid 2% and is still up about 12% for the year, but the pain was concentrated in artificial intelligence-linked names. CoreWeave plunged more than 25%, while Micron and AMD fell 15% and 13%. The worry was that demand for AI may not be enough to justify the heavy borrowing companies are doing to build out their networks. In other words, the market's leadership is now tied to a spending cycle that depends on financing as much as enthusiasm.

So what for long-term investors? A four-year streak is a reminder that compounding rewards staying invested, but it is not a signal to stretch for risk. The durable approach is to focus on what you are paying relative to cash flows, favor businesses with strong balance sheets and dividends that do not depend on cheap capital, and be wary of letting a handful of richly valued AI leaders quietly dominate a portfolio. Bull markets rarely end on an anniversary; they end when expectations outrun earnings. Knowing how much of that expectation you own is the real discipline.