{"id":649,"date":"2020-01-26T14:17:47","date_gmt":"2020-01-26T14:17:47","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=649"},"modified":"2020-01-26T14:17:49","modified_gmt":"2020-01-26T14:17:49","slug":"why-a-bull-market-ends","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2020\/01\/26\/why-a-bull-market-ends\/","title":{"rendered":"Why a Bull Market Ends"},"content":{"rendered":"\n<p>Jon writes about this on his blog. When?\nThat\u2019s what everyone wants to know. The answers to&nbsp;<em>why<\/em>&nbsp;a bull\nmarket ends come pouring in the second the&nbsp;<em>when<\/em>&nbsp;is confirmed. But\nthe explanations why are usually complex. They certainly won\u2019t help anyone\npredict the next turn. They\u2019re often secondary, or scapegoats, to what really\nhappened.<\/p>\n\n\n\n<p>Peter Bernstein offered a simple answer to\nwhat triggers the end of all bull markets: What was the secret ingredient that kept investors buying and buying at\nhigher and higher prices? Was it the myths that this market, like all bull\nmarkets, created to justify itself? Although the myths helped keep the pot\nboiling, the basic explanation for the bull market\u2019s longevity and vitality in\nthe face of so much economic difficulty is simpler, more fundamental, and more\neasily generalized. The same simple, fundamental explanation applies to the\nbull market\u2019s sorry end as well.<\/p>\n\n\n\n<p>The common thread\nthat runs through all equity bull markets is confident expectations of higher\nearnings ahead. The common thread that ties the onset of all bear markets\ntogether is the loss of those confident expectations of higher earnings ahead.\nHistory shows us, over and over, that bull markets can go well beyond rational\nvaluation levels as long as the outlook for future earnings is positive.<\/p>\n\n\n\n<p>Bull markets\nrequire economic slack so that companies can grow, and positive trends in real\nbusiness activity to take advantage of that slack. Remember, stock prices show\nno consistent relationship with interest rates, exchange rates, inflation\nrates, budget policy, monetary policy, or any of the other things professionals\nlove to discuss. These forces matter only when they matter to the future\nmovement of corporate earnings. Those same irrational valuations that seem to\ndefy gravity spur the \u201cmyths\u201d that get investors into trouble. The big mistakes\n\u2014 overconfidence, trivializing risk, chasing returns \u2014 can leave investors\nunder-protected for what inevitably comes next. Overpaying for (optimistic)\nfuture earnings never ends well.<\/p>\n\n\n\n<p><strong>Jon concludes that\nthe important thing is to recognize the role confidence has on market prices\nand the obvious risk of getting caught up in the\nexcitement.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jon writes about this on his blog. When? That\u2019s what everyone wants to know. The answers to&nbsp;why&nbsp;a bull market ends come pouring in the second the&nbsp;when&nbsp;is confirmed. But the explanations why are usually complex. They certainly won\u2019t help anyone predict the next turn. They\u2019re often secondary, or scapegoats, to what really happened. Peter Bernstein offered [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[74],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/649"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=649"}],"version-history":[{"count":1,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/649\/revisions"}],"predecessor-version":[{"id":650,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/649\/revisions\/650"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=649"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=649"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=649"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}