Late Cycle... or New Cycle? When will it end!
Its worth considering what market cycles can tell us about when this run will end. I won't (can't) explain the logic behind cycles, but they appear in every aspect of nature, which includes human behaviour. Seasonality is a well known example.
Using the Dow Jones as a barometer, its clear that there were 7 years between the 2002 and 2009 lows. We can't predict exact business cycle lengths, but it would seem from recent history that the next could have ended somewhere between 20015 to 2016. Because this did not appear to happen, investors now worry that a correction is overdue.
But what if the cycle low did happen? The market did not in fact move for nearly two years - from January 2015 to the elections in 2016. If true then the next mid-cycle, marking a peak, is towards the end of 2018. Interestingly this coincides with US mid-term elections, and in Europe the exit of the UK from the EU. 2018 could also mark the turning point for 'Quantitative Tightening' and monetary policy.
Momentum certainly is driving prices higher for now; reflecting easy financial conditions, low unemployment, and reasonable growth.
Behaviourally, a bull market end when 'bears' throw in the towel, and euphoria reigns. For any market, it creates a simple demand/supply imbalance. This cannot be said of the current state, and so we may look to 2018 for the final phase.
Using the Dow Jones as a barometer, its clear that there were 7 years between the 2002 and 2009 lows. We can't predict exact business cycle lengths, but it would seem from recent history that the next could have ended somewhere between 20015 to 2016. Because this did not appear to happen, investors now worry that a correction is overdue.
But what if the cycle low did happen? The market did not in fact move for nearly two years - from January 2015 to the elections in 2016. If true then the next mid-cycle, marking a peak, is towards the end of 2018. Interestingly this coincides with US mid-term elections, and in Europe the exit of the UK from the EU. 2018 could also mark the turning point for 'Quantitative Tightening' and monetary policy.
Momentum certainly is driving prices higher for now; reflecting easy financial conditions, low unemployment, and reasonable growth.
Behaviourally, a bull market end when 'bears' throw in the towel, and euphoria reigns. For any market, it creates a simple demand/supply imbalance. This cannot be said of the current state, and so we may look to 2018 for the final phase.
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