Longest Bull Market in History

Sarenco

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The S&P500 has just closed at yet another all-time high ahead of the 4th of July holiday.

The unprecedented length of this bull market really is extraordinary. Run bull, run!
 

joe sod

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The unprecedented length of this bull market really is extraordinary. Run bull, run!
also the unprecendented low interest rates going back to 1982, even at almost 0 interest rates money is not flowing from bonds to stocks which is the normal pattern in stock market bulls. Yes the US stock market has gone up but most of that quantitive easing dollars , euros and yen has not gone into stocks , its still in bonds or gone back to property. If there is another stock market crash , there will also be rush to sell the riskier bonds and this will crescendo throughout the bond markets and wont be contained like in 2008. The bond market is where the real danger lies because it is enormous and dwarfs global stock markets
 

MrEarl

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With rates likely to remain extremely low, there's potential for the markets to go higher in the next 12 months ... although that assumes that Trump, Boris etc. don't cause massive problems during the same period.
 

Sarenco

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Yes. But if it's in the press, it's in the price...

I started this thread almost a year ago to record something unprecedented. And on it goes...

I've no idea what's going to happen tomorrow but we are living through something that's never happened before, How to react to that is obviously up to each individual investor.

I'm starting to feel cautious (while keeping the majority of my retirement savings in global equities).

What are you doing?
 

joe sod

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S&P500 just broke 3,000 for the first time.... in the words of Bobby Axelrod its been a helluva ride
still need to keep things in perspective, the ftse 100 at 7500 now but was around the same level in year 2000 before the dot com bust 20 years ago, the iseq is at 6250 but was at 10000 back in 2008 before the banking collapse.
Yes the US stock market has been the star performer and it now is valued at 30 trillion, however the US bond market has grown even larger over the last 20 years and is now at 45 trillion total valuation even at such historically low interest rates.
 

Andrew365

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still need to keep things in perspective, the ftse 100 at 7500 now but was around the same level in year 2000 before the dot com bust 20 years ago, the iseq is at 6250 but was at 10000 back in 2008 before the banking collapse.
Yes the US stock market has been the star performer and it now is valued at 30 trillion, however the US bond market has grown even larger over the last 20 years and is now at 45 trillion total valuation even at such historically low interest rates.
Is that not because of record low interest rates makes in incredibly cheap for companies to issue debt which is lapped up from investors seeking yield. Much more profitable than using their own cash to fund growth etc?
 

Andrew365

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Yes. But if it's in the press, it's in the price...

I started this thread almost a year ago to record something unprecedented. And on it goes...

I've no idea what's going to happen tomorrow but we are living through something that's never happened before, How to react to that is obviously up to each individual investor.

I'm starting to feel cautious (while keeping the majority of my retirement savings in global equities).

What are you doing?
Depends on your time to retirement? I have quite a long time 30+ years to retirement so I am still bullish on Equities and should have enough time to ride 2 more cycles. If it was less than 10 years I would be looking to see if my retirement goals have been met and if so start switching into a less risky split.
 

joe sod

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Is that not because of record low interest rates makes in incredibly cheap for companies to issue debt which is lapped up from investors seeking yield. Much more profitable than using their own cash to fund growth etc?
yes and also incredibly cheap for governments including ireland to keep spending and they have no problem finding people to lend them this money even at ridiculously low interest rates. Yes the borrowers are acting rationally by taking this incredibly cheap money, but are the lenders ??
 

Andrew365

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yes and also incredibly cheap for governments including ireland to keep spending and they have no problem finding people to lend them this money even at ridiculously low interest rates. Yes the borrowers are acting rationally by taking this incredibly cheap money, but are the lenders ??
Yes they are because they have very tight capital requirements.
 

joe sod

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Yes they are because they have very tight capital requirements.
who are "they" the banks you mean?, so they are mandated to lend to for example the irish government money for 10 years and only get 0.25% interest !! is it any wonder the banks throughout europe are in big trouble. Obviously the whole thing is set up to keep highly indebted governments in business. You could argue that the bond markets are now providing a social service
 

Sarenco

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So your concern is that a spike in interest rates might cause borrowers to default. Right?

What would that do to stock prices if corporates have loaded up on cheap debt to fund operations, buy back shares, etc?

I'm really struggling to understand what point you are trying to make.
 

joe sod

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@Sarenco, in a word yes, the two assets are inextricably linked now, therefore if interest rates rise there is no safety in bonds. Therefore if it is still in the central banks control they can't raise interest rates because of what it will do to the bond markets. even if inflation goes up they will pretend its not happening. look at the Fed even with booming US economy and record low unemployment they have stopped raising interest rates and are reducing them again. The play book has been changed since the financial crisis because lowering interest rates should not cause money to flow into bonds it should be flowing out of bonds. The question is why are "investors" so willing to lend money even at negative interest rates, there is no precedence for this?

You posed the question about the "longest bull market in history" being unprecedented, but also the record money in bonds also unprecedented, the record low interest rates also unprecedented and this flow of money into bonds going all the way back to 1982, also unprecedented.
 
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Andrew365

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who are "they" the banks you mean?, so they are mandated to lend to for example the irish government money for 10 years and only get 0.25% interest !! is it any wonder the banks throughout europe are in big trouble. Obviously the whole thing is set up to keep highly indebted governments in business. You could argue that the bond markets are now providing a social service
The banks throughout Europe are not in Big Trouble. What is actually happening is that Banks are struggling to make their target returns due to low interest rates and the amount of capital they have to hold now vs 2008 and the amount of extra regulation that controls the type of lending that they do. Banks will not have concentrated exposure to one industry or one client and the amount they do is stress tested to ensure they have enough capital to withstand if the market goes belly up. Actually what is happening is that Banks are moving back to more of a utility that should not be making huge amounts of money and thus they are in a transition phase and that is why we are seeing job cuts. It is no different to factory works losing jobs due to automation and efficiencies etc, it is part of the business cycle.

The concern across the market is the huge amount of corporate debt especially in the US in the BBB high yield and CLO (Collateralized Loans Obligations) market. I do agree now that the Central Banks have started tampering with Interest Rates / Quantitative Easing, it is very hard for them to stop and the tools they have are becoming less effective.
 
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