Transitioning from Secular Bull to Bear?

We Present, You Decide!

Secular trends in inflation adjusted equities average between 15 and 20 years. Since such price movements embrace a number of business cycles, identification of a reversal usually requires several years. If 2022 was the zenith of the post financial crisis bull market, the intervening year and a quarter is a relatively short period from which to conclude that a turn in the secular tide has taken place.

That said, several indicators have already begun to signal a change in trend. Our guess is that the odds favoring a secular peak are greater than 50/50, possibly as high as 60/40. Since the average inflation adjusted loss for a secular bear is around 65%, this is no small matter. Our first task is to outline why we think the odds narrowly favor a secular bear and then to outline what we might expect going forward.