It's Last Orders For This 410 Week Bull Market
A gallant and statistically foolhardy statement to make as any seasoned trader will tell you, after all remember the famous economist John Maynard Keynes quote that goes “The market can remain irrational longer than you can remain solvent”. This bull market that fly’s in the face of any bad news, presently the markets interpretation of any bad news is that it's market positive (QE will prevail) and of course good news is also just one more reason to buy.
As everyone knows every party end someday and then there’s the morning after hangover and the sober awakening of the financial expenditure realized, so why would this party end any different?.
Certain the bulls aren't going to give up easy but sure as night follows day the inevitable will prevail, so what is the end going to look like?
I could try to rationalize why global markets are doomed with the world's debt levels now at a crushing backbreaking $217,000,000,000,000, the Record margin debt, the Insane US stock valuations, US on war footing with North Korea, Dysfunctional US politics, or even I could throw in the US $19,846,342,893,093 national debt that keeps growing, the $538,715,860,000,000 derivatives ticking time bomb, the $1.3 Trillion Student loan debt crisis, the $1.2 Trillion auto loans subprime bubble, the $1 Trillion US credit card debt, not forgetting the Federal Reserve $4.5 Trillion balance sheet not leaving out Illinois imminent downgrade to junk status and potentially culminating in a default for the state whose unpaid bills now surpass $15 billion, etc.
Sorry to disappoint but no it won't be due to any of the above reasons, it's understanding that the stock market normally has a statistical 53% upward drift. It will be simply because of mean reversion (assumption that stock prices will tend to move to the average price over time), You see that's the markets psyche, it doesn't care till one morning you wake up and then it just does, then you realize what a difference 24 hour can make.
It’s worth pointing out that the mathematical equation mean reversion or "Regression toward the mean" also applies to volatility, volatility has been at historical lows and what's more alarming is it's been for a protracted period. The quiet can foretell the storm, expect turbulent waters ahead, batten down the hatches. Volatile markets with a cascading of margin debt capitulation and poor liquidity will make markets too painful and gut wrenching for most investors.
(An extract from my last month's Investment club blog) "The bull market turns eight years old on Thursday March 9, predicting the end of a bull market is never really a wise move but my technical indicators indicate that by this time next year "Risk on" at any price will be nothing more than a distant memory".
(Meaning of “last orders” in the English dictionary, in a British pub the last drinks that customers are allowed to buy just before the bar closes, Last orders gentleman please!.)
The Manager, Fidelibus Lucrum, Pooled Investment Club.
18 July 2017. 16.31 Eastern.
