The Three Year Itch

I’m heading north for the school holidays—Uluru, Broome, then Exmouth. We try to get away every break; ring-fencing time with the family keeps life in balance.

It’s been a few weeks since I last wrote. After a solid stint on air with the Ausbiz crew, it feels good to put fingers back on the keyboard.

Thirty thousand feet above the desert, I’m looking down at red soil and back at markets. 2025 has served up the full tasting menu: fresh all-time highs, tariff tantrums, whipsaw volatility, record drops and rebounds, no shortage of geopolitics, and now the main course—earnings season. Markets need a wall of worry to climb, and so far equities have scaled it with impressive resilience.

Exhibit A: the S&P 500 notched a new all-time high today—just four months after its February 19 peak, with a near-20 % drawdown sandwiched in between.

I said it two months ago when I was buying—it wasn’t a call about where the market had to go next. It was about positioning for what usually happens when you put the odds in your favour. If I was right, I’d participate in the next leg higher. If I was wrong, more cash and time on the side lines to go to work. That’s not a prediction, that's a process.

Listen, Markets hate war headlines… but love to climb cliffs of worry.

This table from Ryan Detrick of Caron Group tracks every major geopolitical event since WWII. Median S&P 500 performance:

• 0.7 % one month later
• 2.2 % three months later
• 4.4 % six months later
• 9.0 % twelve months later

They're positive 12-month returns 65 % of the time. Or another way to look at it:

• 1 month later = coin-flip
• 3 months later = most are green
• 12 months later = S&P higher nearly two-thirds of the time with a median gain of ≈10%

Volatility can bruise short-term confidence, but long-term investors have historically been rewarded for staying the course.

Year Three: Built-In Turbulence

After two blockbuster years—+22 % off the October 2022 lows and another +34% in 2024—the S&P 500 has hit the pause button in 2025. Volatility’s back, headlines are ugly, and every second tweet says "bear market inbound." Relax. History says year three of a new bull almost always feels exactly like this.

Look at the data: bull markets that live to see their second birthday barely make progress in their third—about +2 % on average, and none have cracked double-digit gains since the mid--1980s. In other words, fatigue in year three isn’t a bug; it’s standard operating procedure. 

The Pay-Off for Patience

Here’s the kicker: years four and five tend to roar back once the market’s done catching its breath. Think of 2011—debt-downgrade panic, near-bear, plenty of hand-wringing. Then the longest bull ever marched on for another eight years. Same pattern shows up in the 1987-2000 run and every other long-haul bull since.

More similarities...

‍Why The Itch Scratches Now

1. ‍Two-Year Sugar Rush: Markets sprint out of bear-market lows; corrections get postponed, not cancelled.
2. ‍Macro Noise Peaks: Geopolitics, policy jitters and déjà-vu recession calls pile up. They rarely derail the cycle—but they do shake out weak hands.
3. ‍Positioning Gets Crowded: After back-to-back double-digit years, everyone’s on one side of the boat. A sideways grind forces the "tourists" to disembark.

What We're Doing at Longview‍

• Staying invested. You don’t bail on a winning marathoner because he slows for water at kilometre 30.
• Trimming exuberance, not exiting. Rebalance portfolios back to strategic weights—harvest a bit of last year’s gains, top up quality laggards.
• Holding cash for opportunity, not as a bunker. Vol spikes are shopping sprees for disciplined investors.
• Keeping context front-and-centre when clients panic. "Three-year itch" beats "end-of-the-world" every time.

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Here are the five post-1975 bull markets that made it to a third birthday. Year three was almost always a grind—plenty of chop, plenty of second-guessing—yet each of those cycles still powered on for years. The shortest of the lot ran five years; on average they logged roughly eight. Watch the data-it never lies. 

‍Bottom Line

Bull markets itch in year three; investors scratch by selling. The data—and every seasoned market cycle—suggest that’s usually a mistake. Stay cool, stay diversified, and remember: the long view is where real wealth compounds.