• 5 hours The True Cost Of Opportunity In America
  • 11 hours Why Investors Shouldn't Ignore Gold Stocks
  • 1 day Facebook Scrubs Over 2 Billion Fake Accounts
  • 1 day Dow Scrambles To Avoid Fifth Straight Weekly Loss
  • 2 days Is This The World’s First Truly Democratic Stock Exchange?
  • 2 days India’s Wealthiest Set To Hold $23 Trillion By 2028
  • 2 days First Quarter Profits Slip For World's Top Oil Companies
  • 3 days The Yuan May Be China's Biggest Weakness
  • 3 days Hedge Funds Having A Banner Year
  • 3 days Disney Heiress Asks “Is There Such A Thing As Too Much?”
  • 3 days BHP Turns Bullish On EVs
  • 4 days Investors Turn Bullish On America’s Nuclear Decommissioning Business
  • 4 days The $90M Inflatable Rabbit Redefining Modern Art
  • 4 days Huawei’s Fate In The Air
  • 4 days Tesla Slashes Prices Again
  • 5 days The Modern History Of Financial Entropy
  • 5 days Italy’s Central Bank Embraces Sustainable Investing
  • 5 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
  • 5 days Researchers Push To Limit Space Mining
  • 6 days Could China Start Dumping U.S. Treasury Bonds?
How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

  1. Home
  2. Markets
  3. Other

Update: One of the Longest Cyclical Bull Market In US Stocks May be Coming to an End

Sell when the market has had a long rise and is hesitating, with everybody in the frenzy of optimism. Don't be fooled by cats and dogs leaping up after the good stocks have hesitated. ~ Bernard M Baruch, one of the most successful American speculators and among the most powerful political kingmakers in American history.

This is an update to my editorial of April 05,2015.

It is safe to say that the market, as represented by S&P 500, has been hesitating (see Fig. 1) and "the frenzy of optimism" seems to be receding, i.e., the best time to sell may already be in the past, but it is not too late to sell.

S&P500 over the past 28-weeks

According to a biographer, W.L. White:

"Another Baruch practice which might be a rule is, when a market operation is finished, to liquidate completely, salt the profits down in cash and bonds ("where it wouldn't forget who owns it") and then often to take a train out of town, to "soar off like an eagle, circle high above men to look things over."

After several years of 20%+ annual rise without a serious correction, the hesitation over the past 6 months is a potential signal of a top formation to be followed by a bear market. I do agree with the bullish stock market commentators that under the current conditions we would not have a bear market unless the economy were to follow with a recession. And they imply that since no one is forecasting a recession we wouldn't have a bear market is stocks. The only problem with this logic is that there is an abysmal record of forecasting the future recessions, by economists as well as bullish stock market prognosticators, and generally the decline in the stock market is a better predictor of the coming recession. My prognosis is that a 20%+ decline in S&P 500 would be a good signal for the coming recession.

I also expect that the coming recession in the US, triggered by external events, such as China, or domestic problems, such as changes in the monetary policy, or lack there of, would be synchronous with a global recession. In that case, the bear market in stocks would be a very nasty decline, to top the declines during 2000-2003 and 2007-2009. The buy-and-hold philosophy and following of people like Warren Buffett would take a serious hit to their reputations. Most people get wiped out in the stock market only once or twice in a lifetime and the lesson is never learned. Stock market promoters are always successful in reviving general public's enthusiasm for stocks.

 

Back to homepage

Leave a comment

Leave a comment