A. The latest Fortune magazine listed top 5 reasons why this bull market is about to end:
- The bull is aging. Since WWII, the average bull market lasted 4.5 years. Only 3 of the previous 11 bull runs made to its 6th year. More importantly, the average bull has produced a gain of 141% for S&P 500, but this one has already returned 173% through Feb 2014.
- PE is high. The current S&P 500 forward-PE is around 16, and it has increased by 50% since 2011 - the largest PE expansion since the late 1990s.
- The economy is sluggish. Investors have largely written off the winter's economic freeze as a temporary effect of the frosty weather, but the economic data need to blossom in spring.
- Fewer stocks making new highs.
- Too many people are optimistic.
However, the same article also offered a reason why this bull run is not over yet - as long as there is a healthy dose of skepticism, the possibility for new highs remains!
What can you do facing this situation as an ordinary investor?
Heed this Fortune magazine advice: not much, stick with the basics: keep a diversified portfolio of low-fee funds and put money in at regular intervals. Right now is not a good time to be speculative, but trying to time the market is unwise.