The stock market has a way of making investors feel like what's happening right now has never happened before. Whether it's a soaring bull run or a terrifying plunge, the emotional weight of the moment can distort our perception of reality. But a powerful visual analysis from Morningstar's latest Market Observer report cuts through the noise, offering a century-long perspective that challenges some of today's most persistent market myths.
This compelling chart maps the entire journey of U.S. equities since 1926, color-coding the three distinct phases of market cycles: sustained growth periods in blue, significant downturns in magenta, and recovery phases in aquamarine. By defining expansions as the time after markets reclaim previous peaks, downturns as drops exceeding 20% from those highs, and recoveries as the climb from trough back to peak, the visualization tells a story that raw numbers alone cannot convey.
What makes this chart particularly valuable isn't just its aesthetic appeal—it's how effectively it dismantles common misconceptions about both current conditions and historical patterns. Let's examine three myths that collapse under the weight of this data.
**Myth #1: The Current Expansion Is Unusually Powerful or Prolonged**
The anxiety that we're experiencing something unprecedented is perhaps the most common sentiment among investors today. Yet the data tells a remarkably different story. Since 1926, the U.S. market has completed ten full expansion cycles before our current one, providing a robust sample size for comparison.
The historical average for these growth periods is 69 months, with a median duration of 56 months. The longest expansion stretched over twelve years, from November 1949 to December 1961, while the briefest lasted just twelve months from November 2006 to October 2007. During these periods, markets typically more than tripled in value, delivering an average cumulative return of 224% and an annualized gain of 20.8%.
Our present expansion, measured through December 2025, has lasted only 25 months. That's less than half the historical average and nowhere near the record-setting runs of the past. The annualized return of 21.4% over this period aligns perfectly with historical norms, not above them. Even when measured from the September 2022 low point, the market's approximately 93% gain translates to a 22.5% annualized return—only marginally higher than the 20.6% average of previous cycles.
**Myth #2: This Bull Market Is Running Out of Steam**
Another widespread concern is that the market has been rising for too long and must soon reverse course. This fear stems from a misunderstanding of how market cycles actually function. The time elapsed since the last significant bottom is not, by itself, a reliable indicator of an impending peak.
Historical analysis reveals that the average recovery period—defined as the time needed to recoup losses from a 20%+ decline—lasts 37 months. Some recoveries have been remarkably swift, like the four-month rebound following the 2020 pandemic crash. Others have been grueling, such as the post-Depression recovery that took over twelve years to complete.
When you combine the average recovery duration with the typical expansion length, you get approximately nine years from trough to subsequent peak. Given that our current cycle began its recovery in September 2022, we're only about three years into what history suggests could be a much longer journey. The notion that this bull market is "long in the tooth" simply doesn't hold up against a century of evidence.
**Myth #3: Bear Markets Permanently Destroy Wealth**
While the article doesn't explicitly state a third myth, the underlying message challenges the fear that bear markets negate all progress. The chart's long-term perspective reveals a crucial truth: downturns are temporary interruptions in a broader upward trajectory. Each magenta decline, however severe, has ultimately given way to a blue expansion that eventually surpasses previous highs.
The key insight is that market resilience isn't measured in months but in decades. Investors who maintain perspective during downturns have historically been rewarded for their patience. The cyclical nature shown in the chart demonstrates that while timing the market is nearly impossible, time in the market has consistently proven valuable.
**What This Means for Today's Investor**
These revelations offer several practical lessons. First, context is your most powerful investment tool. When headlines scream about unprecedented markets, consult historical data to ground your perspective. Second, duration alone doesn't predict turning points. A bull market doesn't die of old age; it dies of specific economic conditions that aren't necessarily tied to how long it's been running.
Third, recovery periods are inherently unpredictable. The four-month 2020 recovery and the twelve-year Depression-era rebound represent extremes, but most fall somewhere in between. Planning for a multi-year recovery is prudent, but expecting any specific timeline is speculative.
Finally, the chart reinforces the virtue of patience. The most successful investors aren't those who perfectly time entries and exits, but those who remain invested through complete cycles. The 224% average gain during expansions dramatically outweighs the temporary pain of downturns for those who stay the course.
**The Bottom Line**
Morningstar's century-long visualization serves as a powerful reminder that our present moment, while emotionally charged, is neither as exceptional nor as dangerous as it might feel. The current expansion's length and strength fall well within historical parameters, the recovery timeline suggests we may have considerable room to run, and the long-term upward bias of equities remains intact.
Rather than fearing the unprecedented, investors would be wise to recognize the familiar patterns playing out yet again. History doesn't repeat itself exactly, but as this beautiful chart demonstrates, it certainly rhymes—and those who listen carefully tend to make better decisions with their capital.