I’ve made millions in the stock market being both bullish and bearish at various times, but as the longevity of this most recent bull market continues, it’s difficult not to acknowledge signs that this bull market will end sooner rather than later.
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Sign #1: This Bull Market Is Long
We’ve been in this bull market for nearly double the amount of time as a normal bull market and while it’s not the longest ever, the longer it goes on, the higher the odds it’ll come to an end sooner than later. There doesn’t seem to be anything really wrong with the economy or valuations as of yet, but the market always moves in waves so it’s best to be conservative this late in the bull market game.
The longest bull market was many more years than the current one so there’s still a chance my conservatism and pessimism is just me worrying too much, but I held onto my first million made during the 1999-2000 bubble by being cautious, unlike just about everyone else, and far too many people right now think they’re geniuses only because of this bull market. That’s dangerous and us veterans know the stock market makes a habit out of humbling those whose egos have grown too much.
Sign #2: 'Tis The Season
Most of the stock market crashes in the past have happened toward the end of the year in late September and during the month of October so be prepared in case history repeats itself this year. Historically, the best performing months are November through May each year and it sounds crazy, but during my 15 years in the stock market, I’ve definitely learned to respect this seasonality.
The good news is crashes rarely happen out of the blue – terrorism aside – so there’s usually a few days or even weeks of gradual market fading leading up to big crashes so definitely be on the lookout for that kind of dangerous price action over the next few weeks.
Sign #3: Not Much Fear
Despite market veterans like me calling for conservatism, most traders and investors forget the lessons of the past and with every new bull market, they get far too aggressive, comfortable and leveraged. The risks they take pay off during long bull markets like this and that only reinforces the wrong lessons and they don’t realize it until far too late.
Take it from me, the stock market is a great place to grow your savings and possible even get rich. But those who earn too much too fast without regards to safety get burned badly when history repeats itself time and again.
Remember your Greek mythology, Icarus ignored instructions not to fly too close to the sun and his wax wings melted, leaving him to die when he fell. Don’t let your accounts die when the inevitable bear market shows itself, don’t let hubris be your downfall.
Things I Liked:
1. The NFL is now in full safety mode as a result of the Ray Rice controversy, good, in the future these animals will be punished more.
2. Even rival teams showed Derek Jeter the respect he’s earned over the past two decades, good sportsmanship.
3. Alibaba’s IPO was a hypefest and anyone who bought in the first hour of the stock’s open is down 5-10%, let that be a lesson to you.
My New York Giants are looking better, no 0-6 start this year, go Big Blue!
Michigan football coach Brady Hoke should be fired ASAP for his terrible performance, yes, but now much worse, he left an injured quarterback in the game…not acceptable.
For more financial advice, visit timothyskyes.com.