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Quick Thought Of The Week: Horrible

Brian-Hillegas-Flickr

We are just days away from the longest bull market of all time. Some people are understandably worried because, as we know only too well, nothing ever goes on forever.

At some point, this bull market, just like the last one will come to an end. And the previous longest bull market did not end well, at all.

The current record holder for the longest bull market was in the 1990s. At that time, which I remember well, investors piled into many profitless telecom, media and technology stocks. They even had their own acronym, TMT.

We were told, by those in the know, that we were experiencing a paradigm shift. The world that we knew it, would change forever because of the new technology. That is now indisputable. The internet has changed our lives.

But now there are new tech kids on the block – Artificial Intelligence, Virtual Reality, Unmanned Aerial Vehicles, Augmented Reality, Autonomous Cars, Cryptocurrencies, Blockchain Technology and Software As A Service. Phew!

These technologies are supposed to change the world that we know it, too.

So, it is reasonable, to think that history could repeat itself. That this bull market could meet the same fate as the last one – horribly.

Unfortunately, there is no way of telling when that could be. Some reckon that Apple becoming the first company to reach a valuation of US$1 trillion could be the bell that signals the top of the market. That’s possible….

…. But we will only know with the benefit of hindsight.

What we do know is that US corporate earnings this quarter are some 20% higher than a year ago.

What we do know is that companies are buying back more of their shares.

What we do know is that credit is still readily available.

But there are unquestionably headwinds, headlines and headaches for investors to cope with – trade wars, monetary tightening, asset bubbles and a flattening of the yield curve. They can greatly magnify the risks that we face as investors.

But we must try to look past the noise and focus on the things that matter. And let’s not forget that a bull market climbs a wall worry. And right now there is a lot to worry about.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.