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5 Reasons the Bull Market Will Fall and 1 Reason Why It Will Not

4/9/2014

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Picture
Q. Is the 5-year bull market about to end soon?

A.
The latest Fortune magazine listed top 5 reasons why this bull market is about to end:
  1. 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.
  2. 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.
  3. 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.
  4. Fewer stocks making new highs. 
  5. 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. 

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