Investors had no way of knowing it at the time, but one year ago this week marked the low point for North American stock markets and the beginning of one of the most astonishing bull markets ever.

Early March last year was a time of widespread selling in both Toronto and New York. The S&P/TSX composite index hit an intraday low of 7,479.96 on March 6, 2009 — its lowest level since 2003. Its low close came three days later — on March 9 — when it ended the trading day at 7,566.94.

That low represented a stunning drop of almost 50 per cent from its all-time closing high of 15,073 reached just nine months earlier.

The market carnage also reached its trough in New York a year ago. On March 9, 2009, both the Dow Jones industrial average and the S&P 500 hit 12-year lows as the global financial meltdown gathered steam.

Since that gloomy week, however, the markets have staged one of the most powerful rallies of all time.

Unprecedented gains

Due in large part to a doubling of the financials index and rising commodity stocks, the S&P/TSX composite index has risen almost 60 per cent in the past year.

The Dow and S&P 500 are up 61 and 68 per cent, respectively, from their bear market lows. The Nasdaq composite index is up abut 80 per cent.

Run-ups that large in such a short period of time are unprecedented in North American market history. But even with all the gains of the last year, stock markets in both Canada and the U.S. remain well below their all-time highs, which were reached in 2007 (in the U.S.) and 2008 (in Canada).

Analysts say the markets have been rising on better-than-expected economic data, rising commodity prices and solid earnings, which have suggested that a recovery is finally underway.

Analysts divided

Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier, said that looking ahead, 60 per cent annual gains are clearly unsustainable. Still, he sees some room for modest growth for the remainder of the year, forecasting a year-end target of 13,000 for the S&P/TSX composite index — about eight per cent higher than where it is now.

"At this point, it's better to invest in the stock market rather than fixed income vehicles," he says. Nakamoto divides the rally so far into two phases: the "financial system's not going to collapse" phase and the "economy is expanding" phase.

"We're moving into a phase where the rally is more sustainable," he says.

Others, however, think the rally is already looking like it's past its "best before" date.

'The market is getting ahead of itself.'—Ross Healy, CEO, Strategic Analysis

"A lot of cooling out will be required to bring the market in line with longer-term prospects," says Ross Healy, chief executive officer of Strategic Analysis.

"The market is getting ahead of itself," he told CBC News. "Investors should be cautious."

When he looks at the U.S., he says he sees room for more caution because of the precarious state of the U.S. consumer. "Seventy per cent of the economy isn't booming," he says, referring to the percentage of U.S. GDP that consumers account for.

The most recent figures from the Canadian mutual fund industry show that investors are finally responding to the recent market gains by cautiously wading back into Canadian equity funds.

For 2009 as a whole, however, the industry recorded $6 billion in net redemptions in equity funds, the Investment Funds Institute of Canada said.

Fixed income and balanced funds were the most popular choices of fund buyers last year, as cautious investors showed a preference for funds that had a mix of equities and bonds.