Riding a Wave - When Will This One End? Historical Perspectives on Bull Markets

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This Bull Market Will Eventually Run Out of Steam – They ALL Do!

“This too shall pass” are usually words offered to someone suffering a loss or a setback but savvy investors learned long ago that bull markets do not run forever they too shall pass. If ever there was a time for a contrarian view of the market, this is it.

People who correctly call a market crash walk away with all the money. The smart money on Wall Street is more than likely already cashed out and we will be left with the short end of the stick again.

As the euphoria of the bull market grows, more and more mutual funds are loading up on stocks again. The unwitting holders of these funds are about to get their hats handed to them once again. When will they ever learn that the time to buy is when everyone else is selling not when everyone else is buying?

Don’t be Caught Asking Where the Flowers Went Again!

Pete Seeger first asked, “When will they ever learn” in 1955 and Peter, Paul and Mary later turned it into a smash hit during one of the  

Where have all the flowers gone, long time passing

When will they ever learn, when will they ever learn?

 When Will the Walls Come Tumbling Down?

If I knew that, I would not be writing newsletters! I would be with all the other fat cats on a Greek Island watching the sunset on the Mediterranean. The great stock market swindle of 2008 was perpetrated by the most unethical gang of thieves ever assembled. We not only let them get away with it, we hired them to straighten out the very mess they created.

What will bring this market crashing down? Oil, Greece, Greed? What will it take and when will it happen?

We are riding the longest bull market in history and it is times like this that “try men’s souls" and their resolve. Trying men’s souls is another bit of “contrarian speak” because it too was uttered during a down market.

According to The Market Oracle, this bull market is the third longest one in history and Fibonacci fans see it continuing into 2017. Please! When will they ever learn? This market is on its last legs and the smart money knows it. That’s why they are drawing in all the suckers.

This reminds me of the run up to 2008 all over again and of one of my favorite Mark Knopfler tunes, The Devil Baby,

“The freak’s stay together, they’re a tight old crew
you look at them and they look at you”

Later he warns,

“The professor is a talker is a talker, he’s a talking man
if he can’t clean a midway, then nobody can

He’’ll get the tip on in from the midway mud
you gotta have the sawdust in your blood.”

And finally, if you want to join the suckers,

“Springer is a talker, he’s a talkin’ man
He’s got the whole studio eatin out of his hand
you can be on too, with the nuts and the freaks,
Call 1 -800 – I am a geak”

I can’t sing like Mark Knopfler, but I sure recognize a set up when I see one! As that wise investment advisor Yogi Berra would say, “It’s Deja vu all over again!”

The last place you want to put your hard-earned money right now is into highflying stocks in a highflying market. This one is bound for a “correction,” read CRASH and you don’t want to be in with the nuts and the freaks yet again. Keep your powder dry. Wait for the inevitable downturn, wait it out, and then come in when the smart money returns.

More from the Market Oracle

Heed the warning or not, but please pay attention to these facts presented by the Market Oracle:

During the entire 130 years of US stock market data, (February 16, 1885), there have been only five long-term uptrends that have lasted five years or longer. One lasted 13 years, (1987-2000), one lasted 8 years, (1921-1929), and three have lasted 5 years, (1932-1937), (2002-2007), (2009-2014 so far). The 1932-1937 bull market was actually 56 months, and the 2002-2007 bull market was 60 months. This places our current bull market as the third longest in modern history. What may have been already observed by Fibonacci fans, is that each of the four completed bull markets ended in Fibonacci years: 5, 8 or 13. This suggests, should our bull market make new highs next month, its sixth calendar year. It is likely to continue into 2017, its eight calendar year. No guarantees. But stock market history suggests it is certainly possible.

WHEN is the Sixty Four Thousand Dollar Question

Predicting how long the bull will run is risky at best and foolish at its worst. My best guess is we will not see the middle of the year without a massive correction of 2008 magnitude. It may be Greece. It may be oil. Who knows what it “may be,” but it will happen and I am going on record as saying it will be before June of 2015.

I’m not brave enough to short the market because I did that once before and learned another valuable lesson. Never play with your own money when you don’t know what the heck you are doing. It's time to "get out of dodge!?

Timing the market is like waiting for a pot to boil. You know it’s going to happen but you have to leave the room for it to happen. I’m leaving the room and I won’t be back with my money until the inevitable “correction” occurs. It kills me to sit on less than one per cent returns right now but I’ve been burned too many times to pour my money into a raging pot.

For this personal money manager, it’s time to “cut and run," “live to fight another day” and "not let the door hit me in the arse on the way out the door." 

Have I made myself clear or do I need to add that I'm joining the Pips and I'm leaving on that midnight train to Georgia.

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