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The bull market is 3 years old -- or maybe not

The bull market is celebrating its three-year anniversary today. Or is it?

Three years ago, stocks began their recovery from the punishing bear market brought on by the 2008 global financial crisis. The Standard & Poor’s 500 index has more than doubled since then.

But a debate has emerged about whether the bull market actually ended last year when stocks began to swoon in late April -- and whether an entirely new bull run got underway in early October that has carried stock prices to their impressive gains over the last five months.

By the standard definition of a bear market -- a 20% decline from a high on a closing basis -- the S&P 500’s summer pullback didn’t qualify, according to Sam Stovall, equity strategist at Standard & Poor’s Corp. in New York. The index fell only 19.4% from April 29 to Oct. 3.

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But believers in the new-bull theory point out that the S&P did fall more than 20% on an intra-day basis and that other sectors -- small-caps, mid-caps and emerging-market stocks -- all fell more than 25%.

In the short run, it doesn’t matter that much whether stocks are in the first year of a bull market or the first year of recovery from a “severe correction” of 15% to 19.9%.

In the five severe corrections that have taken place 1945, the S&P 500 has notched an average 29.7% gain in the ensuing year, according to Stovall. That’s not that far behind the average 37.7% gain in the first year of an official bull.

But the one-bull-versus-two-bulls argument could be significant in the longer term.

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The average bull market lasts 53 months, or nearly four and a half years, according to Stovall. But after a severe correction, a bull market lasts for only 26 more months before giving way.

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