Predicting when a bull market will come to an end is a fool’s errand because no one can forecast with any certainty the timing of a shift in investor emotions or preferences. There have been hundreds of legitimate reasons given over the past few years for the reason the bull market is going to come to an end but markets don’t always care about reasoning. In the short-to-intermediate-term markets will do what they want to do and they don’t care about investor worries or definitions of fundamentals.
While you can’t predict when these things will happen I still believe it makes sense to prepare for them by working through scenarios so you can plan for a wide range of outcomes. Investment management in the face of uncertainty is really about expectations management more than anything.
Yesterday I went on What’d You Miss?to talk with Joe Weisenthal and Conor Sen about what could potentially end the bull market in stocks and economic recovery (skip ahead to the 32:50 mark):
The market could keep chugging along or it could all end tomorrow. I wouldn’t be surprised either way. It can be helpful to think through the potential end game — whether it’s now or 5 years from now — so you can have a plan in place either way.
A Wealth of Common Sense is a blog that focuses on wealth management, investments, financial markets and investor psychology. I manage portfolios for institutions and individuals at Ritholtz Wealth Management LLC. More about me here. For disclosure information please see here.
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