Investors are right to ask if this bull market for stocks is going to be over soon. It is after all, the second longest bull market in history. The answer isn’t easy, but there are indications that this old bull still has some legs.
Our indicators point to more growth... for now.
By any measure, the bull market in place sine 2008 is a long one.
Technically speaking, the bear market, precipitated by the deep recession of 2008, ended in March of 2009. The market advance since then is now the second longest, without a 20% correction, on record.
But, does the fact that it's been a long run mean mean it is close to ending?
Let’s start at the beginning. The crash and recession of 2008 was no run of the mill collapse and subsequent economic downturn. It was comparable to the great recession of 1929 in its severity and the resulting stock lows of that seminal event.
When share prices go that low, they have a long climb back to the old highs. Stock markets always fall faster than they rise.
To mitigate the harsh economic affects of such a shock, central banks around the world embarked on a long lasting policy of easy money. This policy has been curtailed in recent years, but today, there is still a lot of liquidity sloshing around in capital markets.
The bull market has been driven by this extra cash – and now that global economic expansion has got some traction, we could be in for more growth.
The recent U.S. tax reform will provide lower corporate tax rates and should motivate U.S. companies with funds overseas to repatriate some of those funds.
All of the Eurozone countries are showing positive economic growth for the first time since 2008 and China continues to show steady growth.
With all of this circumstantial evidence pointing towards a continuation of this long bull market, you might think it would be easy making the call for your portfolio to remain fully invested.
At Campbell, Lee & Ross, we think investors should dig a little deeper and we do just that for our clients.
We monitor 15 different end of cycle indicators for signs of a looming recession that could derail this bull market.
Things like, Manufacturing Inventory to Sales Ratios, Loan Growth and Interest Rate Directions. These indicators give us a much clearer and timely look into the underlying strength of the economy.