The fundamentals of a bull market

For 9 years now we’ve listened to the perma bears try to call one top after another. If one had listened to them you have, and are missing a secular bull market. We had the second worst bear market in history. That leaves a serious mark on many investors. One that many find impossible to forget. So they assume it’s only a matter of time before it repeats. How many crashes have been predicted over the last 9 years? At least a dozen. How many actual crashes have occurred? I would argue maybe one (mini crash) in 2011 when QE2 ended.

For some reason many people are convinced there is no fundamental driver for stocks to be in a bull market…and that is absolutely ridiculous.

Bull markets aren’t driven by monetary policy. They don’t require low interest rates to survive. They don’t need QE, and QT isn’t going to stop a bull market. Trade wars are only a minor distraction and certainly not something that could halt, other than temporarily, a secular bull market. It doesn’t matter who the president is or whether they are Democrat or Republican. For what it’s worth Trump is doing as much as any one man can with the system he has to work with, to benefit the bull market by cutting taxes and regulation . But it really doesn’t matter in the long run because none of these things are what is driving the bull market.

So what is driving the bull market you ask? It’s the same thing that has driven every secular bull market in history. A technological advance by the human race.

In the 20’s it was the automobile and the invention of mass production.

From the 40’s to the mid 60’s it was the invention of electronics and plastics.

From 1980 to 2000 it was the personal computer and the internet.

Today it is a combination of many new and amazing advances in biotech, nanotech, robotics, transportation, clean energy, etc.

Yes we are going to have corrections along the way. There were 5 major multi year cycle lows during the last secular bull market and one of the largest stock market crashes in history in 87. We also had a recession in 91. Did any of these things stop the bull market? No they did not, because none of these things halted the technological advance that was taking place.

We’ve already had two major multi year cycle lows during this bull. One in 2011 and one in 2016. We will have several more along the way and yes we will have at least one recession as well. None of these things are going to stop the human race from taking the next step up. That’s what humanity does. We progress.

I’m already hearing calls for a market crash this fall. The same calls were made last year as well. The perma bears are going to be wrong this year just like they were last year. We are going to have to weather a serious correction but it’s going to occur sometime in mid August to early September just like it did last year. And then we will be off to the races in fall just like we were last year. Anyone who continues to listen to the perma bears will miss the move to 10,000.

The next major 4 year cycle low isn’t going to be due until early 2020. To call for any kind of serious crash before that is destined to fail.

We’re probably going to test the all time highs between now and the next FOMC meeting on August 1st. Then we will have our window for a 5-8% correction. The market will be back at, or making new highs in time for the Fed to raise interest rates again on September 26th.

So if you hear analysts preaching there are no fundamentals supporting this bull market you know they are full of poppycock. The same thing is driving this bull market that drives every bull market. New technology and the inevitable advance of the human race.