May 30, 2019
The theme for this week is: stock market cycles...explained. If you’re an investing novice, like the vast majority of Americans, the stock market and it’s wild gyrations can seem intimidating and confusing. But what if I told you that the cycles of the stock market are actually more regular than you think, and hence more predictable.
When you better understand how stock market cycles work, it becomes easier to decipher where we are in the current cycle and potentially profit from it by making smarter decisions with your money.
Yesterday, I talked about the complete market cycle. It starts with hope, transitions into euphoria at the top, then declines into anxiety, panic, and depression. It’s important that you understand the entirety of the stock market cycle, so if you missed it, go back to yesterday’s episode - episode 227. Today’s episode will make more sense.
Today, I’m going to take a stab at where I think we are in this current market cycle. I don’t often get my crystal ball out, and I don’t believe you can reliably predict the future, but it’s a worthwhile endeavor to try to determine where we presently are, so that’s what I’m going to do today.
Interestingly, the stock market spent most of the spring of 2019 hitting new highs. As I write this, the S&P 500 hit new all-time highs as recently as April 30th, before deteriorating trade talks with China spooked the market. Which begs the question, have we reached the top?
Remember, the emotional state of the market needs to pass through excitement and thrill before reaching its euphoric top. Have the market and investors been in a state of thrill and euphoria at the recent upward march of the stock market? I would argue no. I don’t think we’re there yet. Investors remain cautious, and there are a lot of signs that continued growth in the economy lies ahead. In addition to that, there are massive amounts of cash sitting on the sidelines right now. At a true market top, most of that cash has been put to work, as investors don’t want to miss out. That isn’t happening right now.
So there you have it. I still think this market cycle has room to run. I could be wrong, and only time will tell. What do you think? I encourage you to spend some time this week picking the brains of people you know and paying attention to the emotional state of the markets through the news. Where do you think we are in this current cycle?
That’s it for today. Thanks for listening!
My name is Ashley Micciche and this is the One Minute Retirement Tip.
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