Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

What If The Secular Stocks Bear Market Is Not Over?

Stock-Markets / Stocks Bear Market Jun 15, 2013 - 10:01 AM GMT

By: Sy_Harding

Stock-Markets

It’s easy to forget, especially in the excitement of the recent new market highs, that not only a cyclical bear market, but also a secular bear market began when the market topped out in 2000.

None other than Warren Buffet warned in November 1999 that “Over the next 17 years equities will not perform anything like – anything like - they’ve performed over the last 17 years.”


When Buffett made his perceptive forecast in 1999 the market had been in a typical 18-year secular bull market since 1982, and had become extremely overbought in the process.

Over the last 110 years the market has cycled fairly regularly between secular bull markets that lasted up to 18 years, and sideways secular bear markets that typically lasted about 17 years.

In a secular bull market there are periodic bear markets, but they are usually brief, and then the next cyclical bull market takes over and carries the market onward and upward to ever higher new highs.

In a secular bear market, periodic cyclical bull markets take place that carry the market back up to the vicinity of its previous peaks. But then the next bear market takes over, the market tops out again, and the long-term sideways secular bear market continues.

The last secular bear market ran from 1965, when the Dow reached 1000 for the first time ever, until 1982, when it reached 1000 for the sixth time in 17 years, and finally kept going into the 18-year 1982-2000 secular bull market.

In the current cyclical bull market that began in 2009, within the secular bear market that began 13 years ago in 2000, the market recently again reached its previous peaks of 2000 and 2007, and this time exceeded those peaks.

But rather than the excitement and bullishness that has created, it might be more appropriate to consider whether the secular bear market remains in place.

Because if it does, the current situation of the S&P 500 looks ominously similar to when the Dow returned to its previous two peaks in 1973, and broke out to a new high, which had investors excited, bullish, and convinced that the secular bear was over. But the next cyclical bear was even worse than the previous two.

So is the current secular bear market over? Is the current bullishness and confidence justified?

A few observations:

If the current secular bear is over it will be the shortest one in the last 110 years.

Then there is the fact that there have been 25 bear markets over the last 110 years, one on average of every 4.4 years. The bull market that began in March, 2009 is now 4.2 years old.

We are also in the first year of the Four-Year Presidential Cycle. The historical pattern is that the first year or two of the cycle tend to be negative, while the last two years of the cycle tend to be positive. The catalyst for the pattern seems to be that each administration wants to see any problems for the economy or the stock market take place in the first two years of the term. They then have time to pull out all the stops in the third and fourth year, to make sure the economy and markets are recovered and positive by the time the next election rolls around.

Then we also have the remaining serious situations created by the 2008 financial collapse that still must be tackled at some point down the road, with their impact unknown. They include the record global government debt loads, the reversal of the unprecedented massive stimulus efforts of central banks, including the U.S. Fed, the return of near zero interest rates to more normal levels, and so on.

We also have a number of conditions that are not comforting if you think about conditions at the market top in 2007, including very bullish investor sentiment, record margin debt (confident investors buying stock with 50% down-payments), consumer confidence, auto sales, home sales, etc. being described as at “levels not seen since 2007”.

That’s similar to conditions during the last secular bear market of 1965-82. Some issues would be resolved, supporting the periodic bull markets, only to have it realized that other unusually serious problems remained to be solved. In those times it was the Vietnam war, runaway inflation, oil embargoes by OPEC, repeated economic recessions, political scandals (Watergate, Nixon’s resignation, etc.), and then record government debt and budget deficits incurred in trying to pull the country out of the malaise of the 1970’s.

That’s not unlike the current situation of the Iraq and Afghanistan wars, political gridlock, two recessions in 8 years, the still questionable anemic recovery from the last one, record budget deficits and debt loads, and still to come fiscal and monetary reversals of the unprecedented stimulus efforts of the last five years.

Unfortunately, the evidence seems to indicate the secular bear market is not only still with us, but may be near its next critical point.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in