You say you want to hold off buying until after the market enters bear market territory, a 20 % decline from the
previous bull market peak.
But the fact that they coincide with so many important
cyclical bull market peaks says something about how those peaks are formed.
But the fact that they coincide with so many important cyclical
bull market peaks says something about how those peaks are formed.
Furthermore, the average is skewed by 1929 and 2000, which were blowoff
secular bull market peaks, whereas we are in a midcycle bull market which should be of less strength.
In 1987, for example, the break following the
August bull market peak was largely recovered over the course of several weeks before failing rapidly in October.
In 1967, the government ordered Proctor & Gamble to divest itself of Clorox, and in January 1969, a single month after the most
speculative bull market peak since 1929, the Justice Department sued the country's most successful company, IBM.
Peter Boockvar, market strategist at The Lindsey Group, said he does believe
the bull market peaked in May, and the market is heading into a bear market.
From the standpoint of the most recent peak - to peak market cycle (i.e. from the 2000
bull market peak to the present), the Strategic Growth Fund has strongly outperformed the major indices with substantially less risk.
Given that the period from the Fund's inception to the present represents the traversal from one
bull market peak to the next, including an intervening bear market, this full period is the most appropriate horizon over which to evaluate the Fund's investment strategy.
As we saw in multiple early selloffs and recoveries near the 2007, 2000, and 1929
bull market peaks (the only peaks that rival the present one), the «buy the dip» mentality can introduce periodic recovery attempts even in markets that are quite precarious from a full cycle perspective.
This substantially exceeded the 10 - year return of about 14 % which would have been achieved had the 2000
bull market peak been held to a P / E of 20 (the market's actual price / peak - earnings ratio moved over 32 during the bubble).
In the last phase, valuation plays little role for the marginal decision - makers, until
the bull market peaks.
Bull market peaks are preceded by at least a little volatility.
An article in Barron's reports these findings, stating, «On average since the late 1920s this hypothetical portfolio gained 15.1 % over the three months prior to
bull market peaks — equivalent to a 75.8 % return on an annualized basis.
It's not unusual to look back at a chart of
a bull market peak and see it as more of a several month process rather than a sharp event.
Inflation - adjusted earnings peaked almost 2.5 years before
the bull market peaked in late - 1968.